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Friday, March 22, 2013

America: home of the lower middle class millionaire

We all know that since the creation of the Fed, the US dollar has lost 98% of its buying power.  And we all know that then Bernanke Fed is on a mission to cut the buying power of the dollar down as quickly and violently as possible.  It's not his fault - how else can he inflate away a hundred trillion dollars of debt obligations?

But what does that mean for the middle class?

Let's say you live in New York City, capital of the world.  It's a great place to live.  Let's say you're a two working parent family with four kids in one of the many many neighborhoods that has not so great public schools.

It will cost you 1 million dollars to send four kids to private school - through high school.

It will cost another million to send them to college.

It will cost another $500,000 dollars to pay for health care through college - that is if none of them get really sick or have some terrible accident.

Then you have to feed them and clothe them.  Oh let's say you're really cheap - mostly macaron and pizza  and hand me downs - you can get away with another $300,000 through college.

Closing in fast on 3 million dollars.

This doesn't count of course, rent/maintenance/common charges/ housing costs.   Who knows?  Does a million sound reasonable in NYC for a family of 6 for 25 years (to get them all through school.)

Probably not.  Maybe 2 million?

Gee, middle class life in New York City costs a family of 6 somewhere around 5-6 millions dollars just for the basics.  Don't mention baby sitters, tutors,  vacations, toys, sports, entertainment, computers, phones, air conditioners, dish washer, washing machines - maybe a car - etc etc.

Of course, you don't really have to be a millionaire, just as long as both parents work full time and make at least $200,000 each before taxes - and aren't saddled with too much student loan debt and mortgage debt.

And don't mind an old age of humiliating poverty.

Yeah, sure, you don't need to have 4 kids.  That's pretty extravagant.  Yeah sure, you don't need to live in New York.  You can live in Sioux City Iowa, and it's surely cheaper - not for health care and college, gas and food and heating oil.  And then in Sioux City you'll probably need 2 cars and have to pay for all the more gas.  But maybe you'll pay less for grade school and housing.  I'll bet a family of 6 there could get away with  3 million dollars through college.

If they're very very careful.  And very lucky.  No bad accidents.  No fires, floods, tornadoes - no break ins, no getting cheated by scam artists in the markets.

And with the Fed trashing cash and punishing savers you better have excellent investing instincts.

Then again you can have no kids at all and spend that excess cash on yourselves.  But then the county dies - like Japan.

But we're not Japan, damn it.

We're the US OF A and this is a great country.  If you're a millionaire.  And you have a lot of luck and foresight managing to stretch those few millions.

If you're really lucky with a few million dollars and a few kids and two working parents you can maintain a nice lower middle class lifestyle.

If not, say hello to the working poor.

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