What is Happening to the Middle Class?

Written by Frugal Libertarian on October 29, 2008 in: Worst Money Spent this Week |

You often hear about the shrinking middle class in this country. The Democrats will tell you it is because the rich are hogging all the money and the Republicans will tell you that it is because of the Democrats tax policies. I think there is truth in both sides, but I will not go into that right now because I do not believe either to be the biggest cause of a shrinking middle class.

I believe the middle class is shrinking because of the artificially low interest rates perpetuated by the Federal Reserve. Easy credit has completely changed our culture. We no longer have much motivation to delay our gratification. Why wait. Buy now, pay later. Karen De Coster thinks the later may have just snuck up on us.    She thinks the bubble is going to burst and I agree.

I often wonder if people know how to use a calculator. If you look at the median income of homeowners (around $70,000) and the median home price (at its peak around $250,000, now about $190,000), the numbers just do not add up. Once you add in all the other average expenditures for an American family, the picture really starts to look bleak.

The average car payment is over $400. Many families have two new cars with large payments. The average credit card debt is $9000.00, which would make the payment about $250.00 dollars a month. Then you have insurance (home, auto, health), heat, electric, fuel, cable, phone, internet, cell phones, trash, water and food still left to pay for. Just using modest estimates I calculate that you would have only a couple hundred dollars left over at the end of the month. And, that is without putting anything away for retirement.

A couple hundred dollars is not much when you own a house or have a child. Even with my frugal ways there is always something unexpected come up that I must pay for each month. The basement needs a dehumidifier while the baby’s room needs a humidifier, the dog needs a hernia repair, the car needs new tires, etc. If you throw any type of wrench into the situation, such as loosing a job, families have little to fall back on.

Now, of course many people think the government should do something to help out the middle class, but why not help ourselves? Stop consuming what you cannot afford. If you do not have at least $500 left over at the end of the month (after putting money away for retirement) than you need to make some cuts in your budget.

I would start with the car. You do not need a new car every three years. You don’t really need a new car ever. Buy used with what you can afford to buy in cash. I remember when I was a kid very few people had a brand new car all the time. Everyone got around just fine.

Next, get rid of your cell phone. If you really need one for emergencies, than get a prepaid phone. I like the GoPhone. It only cost about $8.00 a month. I mean do you really need the cell phone for everyday use. Surely you can decide which spaghetti sauce to buy without calling your spouse for their opinion. And, don’t give me the whole, “but I don’t have a land line so I need the cell phone”. Well, get a land line. You can get a cable phone with free long distance or VoIP cheaper than most cell phone packages.

Hopefully, one positive result of this financial crisis could be that many people will have a wake up call and see that we are consuming ourselves into oblivion.

Good Thing I Don’t Use Cloth Diapers to Save The Planet

Written by Frugal Libertarian on October 21, 2008 in: Worst Money Spent this Week |

I guess it is a good thing that I am using cloth diapers for my baby girl because they are cheaper and not to save the environment.  A new study shows that they may add more CO2 to the atmosphere than disposables.

So I guess we can live with piles of poop diapers in landfills or die from the heat of global warming.  I think I will take my chances and keep using the cloth.

This is Why I Think Less People Should Vote

Written by Frugal Libertarian on October 15, 2008 in: Worst Money Spent this Week |

I have never understood why people think high voter turnout is a good thing.  That just means that more people that have no idea what is going on are voting.  I would rather 10 people who are educated about the issues vote than 10 million who don’t have a clue.  I don’t usually like Howard Stern but listen here to see what I mean.

Socialized Telephone Service? Who Knew?

Written by Frugal Libertarian on October 8, 2008 in: Worst Money Spent this Week |

I paid my cable bill this week, but the $131.35 I paid for cable, internet, and phone was not what stung.  It was a $0.81 fee that is added to my bill every month that really perturbed me.  My cable company charges this fee so that they can recoup the Federal Universal Service Fund Fee that they are required to pay.

What is the Federal Universal Service Fund you ask?  It a $7 billion a year program that supposedly helps provide telecommunication services to those that would otherwise not have access to such services.  The fund is admininstered by the Universal Service Administration Company.  Their website says “[t]he fund is maintained through contributions made by telecommunications providers across the country”.  They make these contributions sound as if they are voluntary.  I assure you that they are not.  These “contributions” are mandated by the Telecommunications Act of 1996.

Now you may be suprised that I would be upset about $0.81.  Everyone knows I am frugal, but being outraged about $0.81 may catapult me into miser status.  But, it is not the cost of the fee that I find upsetting.  It is the existence of such a government program that I find outrageous.

The Universal Service Fund is comprised of four programs.  The High Cost program “ensures that consumers in all regions of the nation have access to and pay rates for telecommunications services that are reasonably comparable to those in urban areas.”  The Low Income program “provides discounts that make basic, local telephone service affordable for more than 7 million low-income consumers.”  The Rural Healthcare program “provides reduced rates to rural health care providers for telecommunications and Internet services so they pay no more than their urban counterparts for the same or similar telecommunications services.” The Schools & Libraries program ”provides affordable telecommunications and Internet access services to connect schools and libraries to the Internet.”

What could be wrong with trying to provide universal telecommunications?  There are two problems with this type of program.  First, the existence of these subsidies distorts competition and encourages small rural telecom companies not to implement cost cutting technologies.  Competition and new technology would go farther to provide universal service than any government subsidy.  If there is a market for a product, such as affordable telecommunications, then profit seeking companies have all the motivation they need to find innovative approaches to providing that product.  These subsidies prevent this and instead encourage profit seeking companies to maintain inferior products while still making a profit at taxpayers expense. 

Second, the government should not be in the business of forcefully reallocating our personal resources.  Taking one person’s rightful property and forcefully transfering it to someone else is theft.  Redistribution of wealth is morally reprehensible, even $0.81 at a time.

Who needs a Job When We Have These Money Making Opportunities?

Written by Frugal Libertarian on October 7, 2008 in: Worst Money Spent this Week |

A little humor might be just what we all need in these scary economic conditions so check out these Get Rich Quick Schemes. 

I personally prefer the Get Rich Slow Schemes like working hard and saving, but hey in these times maybe I should try something new.

Money Making Opportunity for Nursing Mothers

Written by Frugal Libertarian on September 24, 2008 in: Worst Money Spent this Week |

PETA is ridiculus.  This is hilarious though.


Spray Bottle

Written by Frugal Libertarian on September 11, 2008 in: Worst Money Spent this Week |

Yesterday I bought a small spray bottle to put my daughters homemade butt cleaner in, so I could take it with me in her diaper bag. I spent $1.25. It seemed like a reasonable price. It was the right size and it was sturdy. So I go home and pry off the sticky label and mix up her butt cleaner and place it in the spray bottle. I then head out to the store again and what do I come across. The same bottle at another store for $.50. So that extra $.75 is the worst money I spent this week. Just think what I could have done with that $.75. I could have a added $0.32 and bought a Strawberry Slushie at Sonic during Happy Hour.

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