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Income Gap
It's time for a lesson in "Income Gap". What, you say, is that? You should know because you are smack dab in the middle of it. I am probably safe in assuming, that you are not in the top 1% of all wage earners in the U.S. And barring the winnings of that lottery you sometimes play each week, you won't ever be. But you are suffering because of the people who do live in that upper tier. You just don't know it. Here's why. Robert Frank, an economist at Cornell University
wrote in the New York Times a bit ago that this "Income Gap", which is the
purchasing power between the Rich, which is them, and the Middle Class, which is you, has
grown substantially. This is bad.
He goes on to write that some economist don't think that
this is necessarily a bad thing. No one is essentially hurt by the statistic, they say, because no
one ends up with less, in something he calls absolute terms.
Just because the Rich have lots more money, and we
technically don't have less, then things aren't so bad and society is probably better off
as a result. Mr. Frank disagrees and points to the fact that income level isn't
everything. Increased spending by the Rich raises the cost of the goals we are trying to
achieve. Would you be happy if your children were attending
below average schools? I wouldn't and I doubt you would either. But school budgets are
tied to property taxes, and guess what, these are in turn tied to real estate prices. So
if you want to send your kids to a better school, you have to buy a house substantially
bigger that one you might have bought 30 years ago, and you know what that means? A bigger
mortgage. Which means already you have less cash in your pocket. Increased income means
increased houses which mean increased mortgages, and you do care about the size of your
neighbor's house. It doesn't stop there.
You are in your three thousand pound sedan, Mr. Frank
writes, but you share the road with enormous 3 ton Navigators and even larger Ford
Excursions. In self defense, you must buy up.
Wait. There's more.
You are in a good school district and your kids are
rubbing shoulders with wealthier kids and guess what? They need better clothes just to
barely fit in. And the upward pull of affluence begins to exert itself on your clothing
and your entertainment and your vacations.
And now you are hanging out with the rest of your
middle class cronies that have credit card debt that has increased on average to over
$7000!
But you are working, because unemployment is at an all
time low, and there is always personal bankruptcy. To borrow a phrase, "Stop the
Insanity!"
You have to start and it might as well be now.
I want to lead you through some of the pitfalls of your
finances, while dispelling the belief that you will ever enter into that coveted "one
percent" group. If you are not there now, how do you expect to be there when you stop
working.
I want you to be realistic.
I want you to have beer money.
I want you to be happy.
Please take the time to look around the site. You should
find it informative and helpful.
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