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Fixed Costs Are What's Really Driving Americans To The Poorhouse
BI ^ | 12/13/2012 | Mandi Woodruff

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 ...


TOPICS: Business/Economy; Culture/Society; Miscellaneous; News/Current Events
KEYWORDS:
But but but but - the Fed tells us there is no inflation!
1 posted on 12/13/2012 2:09:12 PM PST by GlockThe Vote
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To: GlockThe Vote

Fixed Costs ...

Is that what they call homeowner insurance going UP ?

20% in 2010
12% in 2011
22% now


2 posted on 12/13/2012 2:13:33 PM PST by George from New England (escaped CT in 2006, now living north of Tampa)
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To: GlockThe Vote

“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?

How convenient!


3 posted on 12/13/2012 2:21:44 PM PST by Buckeye McFrog
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To: Buckeye McFrog

Try to explain that to the average obama cult member?


4 posted on 12/13/2012 2:24:01 PM PST by GlockThe Vote (The Obama Adminstration: 2nd wave of attacks on America after 9/11)
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To: GlockThe Vote

>> 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?


5 posted on 12/13/2012 2:24:39 PM PST by Nervous Tick (Without GOD, men get what they deserve.)
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To: George from New England

>>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?”


6 posted on 12/13/2012 2:28:16 PM PST by Bryanw92 (Sic semper tyrannis)
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To: Bryanw92

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.


7 posted on 12/13/2012 2:33:14 PM PST by henkster ("The people who count the votes decide everything." -Joseph Stalin)
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To: Bryanw92
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?”

Which explains this graph:


8 posted on 12/13/2012 2:34:59 PM PST by Uncle Miltie (Cloward-Piven is a two way street. Move your capital out of the U.S. Let the economy burn.)
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To: GlockThe Vote

More ‘normal items’ are becoming luxuries.

Those new luxuries need to be cut to pay for government necessities of paying taxes, fees, fines, insurance.


9 posted on 12/13/2012 2:51:32 PM PST by libertarian27 (Check my profile page for the FReeper Online Cookbook 2011)
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To: GlockThe Vote
Maybe it has to do with this also...


10 posted on 12/13/2012 2:51:36 PM PST by HangnJudge
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To: GlockThe Vote

“Fixed Costs” = “Fascist Rape” .....


11 posted on 12/13/2012 2:59:07 PM PST by mo (If you understand, no explanation is needed. If you don't understand, no explanation is possible.)
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To: GlockThe Vote

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.


12 posted on 12/13/2012 3:01:07 PM PST by Blue Ink
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To: George from New England

Basic accounting.

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.


13 posted on 12/13/2012 3:26:57 PM PST by Ouderkirk (Obama has turned America into an aristocracy of the unaccomplished.)
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To: Blue Ink

Quite true.

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.


14 posted on 12/13/2012 3:27:25 PM PST by Sherman Logan (Brought to you by one of the pale penis people.)
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To: GlockThe Vote
The article really doesn't mention it but, behind much of these increases is the fact that taxes continue to spiral up. Not only obvious taxes like income, FICA and property taxes , but all the little hidden taxes and fees that were unheard of in 1970. Tolls, gasoline taxes all add to the costs of food, and are passed on as higher prices. It used to be you bought a house, and you had a fixed housing payment. The value of the house may go up but you're pretty much paying $XXXX.00 / month in housing. Not so anymore, despite the fact that the value of your property is dropping, your property taxes sewer costs, town tax keeps spiraling up.

A good deal of inflation can be blamed on government at all levels.

15 posted on 12/13/2012 3:48:44 PM PST by YankeeReb
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To: Sherman Logan

Exactly.

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.


16 posted on 12/13/2012 3:52:55 PM PST by Blue Ink
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To: YankeeReb


17 posted on 12/13/2012 3:54:22 PM PST by combat_boots (The Lion of Judah cometh. Hallelujah. Gloria Patri, Filio et Spiritui Sancto!)
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To: Sherman Logan

Yes, but, all three are also subsidized. There are many factors at work in price increases.


18 posted on 12/13/2012 4:10:29 PM PST by Amberdawn
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To: GlockThe Vote

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.


19 posted on 12/13/2012 4:23:27 PM PST by BobL (Did you know that the Chinese now buy close to twice as many new cars as Americans each year?)
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To: Blue Ink
3.”People having trouble paying for groceries shouldn't’t be buying iPhones with a $1200 yearly operating cost”
2.”It’s true that the cost of necessities has gone way up.”
1.”I don’t get the reasoning behind this article at all”

Strike out!

You do know you can elect NOT to post random disjointed thoughts that occur to you, don't you?

20 posted on 12/13/2012 4:47:28 PM PST by sarasmom
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To: BobL
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.

Best thing we ever did was buying Trac Phones several years ago. The annual cost for two phones is a little more than what we used to pay monthly for one "smart" phone. They do the job well. I shake my head at kids who complain about being broke but have iPhones.

21 posted on 12/13/2012 6:58:41 PM PST by roadcat
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To: sarasmom

And you can refute instead of instead of eliminating two crucial supporting sentences led by subordinate and coordinate conjunctions (that’s how grown-ups connect thoughts), and then reversing the order of the remaining sentences to obscure the meaning of a perfectly coherent paragraph.


22 posted on 12/13/2012 11:48:47 PM PST by Blue Ink
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To: roadcat

“Best thing we ever did was buying Trac Phones several years ago.”

LOL. I was wondering if people would know what a Jihad Phone was. Mine was (and is) Net10 Wireless (same company). I used to refill them in Oregon when I made it over there. I’d buy 2 years worth of time for 2 phones for something like $700 - but no sales tax. The hardest part of it was getting my credit card company to approve the sale.


23 posted on 12/14/2012 4:24:51 AM PST by BobL (Did you know that the Chinese now buy close to twice as many new cars as Americans each year?)
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To: GlockThe Vote

Fixed costs have goen up and salaries or wages have not.

For globalism this has to happen in order for Americans to be “competitive” with the Chi-com slaves.


24 posted on 12/14/2012 8:45:18 AM PST by SaraJohnson
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To: BobL

We buy service/time in 1-year increments for $100. That’s $200 for two Trac Phones. We get double minutes for life of the phone, so end up carrying over thousands of minutes - we have better things to do than bury our face in the phone. These phones have never let us down, work anywhere in the U.S.A. without problems. I recommend paying cash - more anonymous.


25 posted on 12/14/2012 11:34:34 AM PST by roadcat
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To: roadcat

SWEET - you’re beyond me.


26 posted on 12/14/2012 3:39:51 PM PST by BobL (Did you know that the Chinese now buy close to twice as many new cars as Americans each year?)
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To: Blue Ink
LOL!

You first stated you didn't understand the article.
Next you agreed with the entire premise of the article.
Lastly, you attempted to set up a “straw man argument” to dispute the findings of the article.

Your coherence is not in question. It is clearly lacking.
You ability to use reason to communicate a rational opinion....is also no longer in question.

I don't need to address your “straw man argument” as it applies to this topic.
I just need to point it out. Which I did.

Have a nice day!

27 posted on 12/14/2012 4:53:06 PM PST by sarasmom
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To: Blue Ink

I gotta agree: someone who sees such articles as finger-wagging is probably buying more mocha lattes than he or she should.


28 posted on 12/14/2012 5:03:06 PM PST by 9YearLurker
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To: roadcat

Where do you get such phones? Do they text?


29 posted on 12/14/2012 5:24:05 PM PST by Chickensoup (Leftist Totalitarian Fascism coming to a country like yours.)
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To: sarasmom

Um... one doesn’t “use reason to communicate,” Miss Doolittle. One reasons. Then one communicates the fruits of one’s reasoning.

Now, please stop with the high-falutin’ pseudo polemics before you embarrass yourself further. Professor Higgins rang for tea.


30 posted on 12/15/2012 9:01:45 PM PST by Blue Ink
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