Add Some Advice For The 1 Out Of 3 People Who Could Not Afford A $500 To $600 Car Repair Without Going Into Debt


#142

We pay into the SS fund and save some in 401K. 30 years later, the government says sorry you don’t get your SS until you fully deplete your 401K because it is not fair to the people that never saved a dime and bought a new iphone each year or decided that they always needed a nice truck and now they have nothing. So it really distinctive people to do the right thing. I might as well as spend every dime I make so I can be bailed out with all the other poor decision makers out there. How is it any different than cash for clunkers or the home bailouts. The people that did the right thing and did not over leveraged and those that made the personal sacrifices and trimmed their budgets never got any help. Many people believe that the bailout were very successful (likely the ones that benefited). Why would you expect anything different than this same failed protocol to be used again and again. Reward the bad decision makers and penalize the people who do the right thing. So we should means test the savers to benefit the non savers.


#143

I’m sorry, Mustangman, but the wealthy should be paying a lot more in taxes then they are. Most CEO’s and other high up management are paying a lower tax rate then I am because most of their income comes from stock options (lower rate). And then there’s corporate taxes which has shifted the burden over the years to the workers.

Trickledown economics does NOT work. Never has worked…and never will work. All it does is feed the American Greed.


#144

But in my skeptical opinion of government I see a great deal of effort to smoke screen special programs and special benefits to a great many and the working people who struggle to support themselves and their families earn too much to benefit from the programs on the bottom while never accumulating enough to benefit from programs on the top. I paid ‘self employment tax’ on every dime I earned operating 2 businesses and never made any significant income above the cap. But I did take advantage of every technicality that I could find to avoid taxes and still paid an outrageous rate. It was significantly greater than the capital gains.

Opportunities for getting ahead are dwindling despite there being more people reaching upper class incomes in recent years. Fewer and fewer people can reach the threshold point of earning more than they need to live comfortably so that they can accumulate worthwhile investment wealth but for whose who can the stock markets have offered a trending and fashionable method of growing wealth. On a dare I bought U-Haul in March of 2009 and sold it 7 years later. And BTW, the broker strongly advised that I not buy it.


#145

Are poor people really likely to have any capital gains?

Here is a relevant tale:
My brother was talking to his brother-in-law one day, and the BIL was almost rabid on the topic of capital gains taxes, and why they should be lowered. This guy drove a 12 year old Dodge that barely ran (the CEL had been lit-up for…years), and his life savings–at the age of 60–were ~$200. My brother tried to explain to him that he (the BIL) didn’t actually pay any capital gains taxes, and as a result this was a moot point for someone in his economic class.

The BIL replied something along the lines of…I listen to Rush Limbaugh every day, and he said that this is a really important issue for all Americans! So, my brother listed the types of things that would result in capital gains, and the BIL finally had to concede that this issue had absolutely nothing to do with his life.


#146

At the risk of being shot by, and with apologies to Carolyn, sure! :wink:

Let’s take business as an example. You often hear the line that unfettered capitalism leads to competition which brings prices down and quality up.

But what actually happens in reality is that you start out with, say, 100 small businesses. Through mergers, acquisitions, and attrition, you end up with 20-50 of them having been brought under one umbrella.

Now you have one big juggernaut which can negotiate better raw materials prices for itself, and therefore it can sell its products at a lower price than the others can make them for. It therefore drives the others out of business, and then you end up with a monopoly or an oligopoly if more than one conglomerate arises.

Those huge corporations can now do virtually anything they want. They control a vast percentage of the labor market for whatever skill they employ, which means they don’t have to compete with the little guy on wages. They get discounts on everything they buy which means they can profit at a price point that would drive ordinary businesses out of business.

In short, you end up with Walmart.

And that applies to individual people too in a vast number of areas. The son of the billionaire will inherit dad’s business. He’ll go to an ivy-league school because his dad can pay his tuition and because his dad built a wing of the college’s school of business which guaranteed the kid admission. The kid has already out-competed the rest of us before he was even born.

That’s not automatically a terrible thing - total equality is neither possible nor particularly desirable. But when the rich then become greedy and start leveraging their vast resources to choke off what resources the rest of us have access to, it starts significantly degrading quality of life for most people.

They can lobby the state legislature to cut public transit funding, which makes it impossible for people who can’t afford a car to get to work, which makes them poorer, which increases the buying power of the rich.

They can lobby the federal government to get rid of environmental regulations, which lines their pockets while giving the rest of us global warming and toxin-based medical conditions.

They can lobby the federal government to cut their taxes, which is paid for by going into massive debt, or tax increases on the non-rich, or both.

They can pay to get people sympathetic to their business interests elected to powerful positions, where those people will then bend or eliminate entirely the rules to benefit those interests. In extreme cases, this leads to war, as defense contractors get rich when the military has to buy weapons and ammunition and therefore have a vested interest in getting warmongers elected.

They can even directly hurt people - Trump is famous for not paying his contractors because his contractors know that if they sue him, he’ll simply out-lawyer them until they run out of money.

They can literally get away with murder. Remember the “affluenza” case? Kid got a slap on the wrist for killing someone while driving drunk specifically and solely because his parents are rich.

Such vast inequality makes it easy for those on top to do virtually anything they wish to those on the bottom without having to face consequences.

We aren’t talking about “why is it bad that my neighbor can get a Porsche when I can only afford a Chevy,” we’re talking about “Why can you not see that it is bad when my neighbor can spend enough money to raze my house because he wants a better view and I can’t do anything to stop him because I don’t have enough money?”


#147

Lets have mercy on poor Carolyn. Back to cars. Welcome to the great US of A. Cars are an important key to mobility, freedom and liberty. Mobility means you can work and live regardless of what the guvment provides for transportation. We do things differently here than they do in Europe or South America. Some people don’t like this but we just vote here. Outside of the major metro areas, cars are necessary and they are even fun. So if you’ve got a car question, some of us would love to help. If you’ve got a bus or train or social engineering question, I don’t know where you should go. Just sayin’ I have to pay 100% of my car expenses and every time I get gas or buy plates, I’m paying for the roads I drive on. I don’t understand only paying 40% of the cost for a ride. Cars are great. Thank you Henry for all you did for us.


#148

OK, First you define the reasons why monopolies are not a good thing and without saying it, why we have laws against monopolies. But every near-monopoly has met their eventual end (if not protected by legislation - Taxis vs Uber) by newer companies offering better. Walmart is reeling with competition from Amazon, Sears, once a great in retail is all but gone, Ford at one time had made 1/2 of ALL the cars in the world by 1920 now is the #2 automaker in the US. GM made 1/2 the cars sold in the US and was the largest automaker in the world. Neither is true today because the lean hungry Japanese and then the Koreans took it away. US Steel once supplied 2/3rds of the steel used in the US, now 8% the same way. All monopolistic giants neutered by competition from smaller companies. That is not in itself a reason against wealth inequality.

You next defined the problems associated with a corrupt plutocracy. Illegal acts ignored if enough money exchanges hands. Influence purchased from politicians to get them elected. Quid Pro Quo. Also illegal. This model was somewhat turned on its head the last election cycle because the president under spent his competition by a wide margin. In a federal republic these things tend to right themselves to a degree. This is, again, not a reason why wealth inequality is bad.

This corrupt model is the end result of corrupt socialist or communist government systems. Systems designed to equalize incomes and opportunities across all people tend to make some people more equal than others rather than to raise all boats, to use your analogy. Actually just the opposite, it drags down the middle to the level of the poor while the wealthy party officials thrive. Fidel and Raoul Castro come to mind. Compare their net worth to an average Cuban.

We will have to agree to disagree here. We view solutions to the worlds problems quite differently I respect your opinions but I don’t share them. Thanks for the post, however. It has been an interesting discussion.


#149

In a view of how the world deals with transportation in general and automobiles in particular there is a vast divergence of thinking from country to country and as a result a vast divergence of automobiles. The 360cc Subarus from Japan and 600cc Fiats from Italy were the result of similar efforts to use taxes to penalize large displacement. If the US had a similar tax the Chevrolet Cadet and Crosleys may have been successful. But then the Japanese discard a great many of their cars after 100,000Km. I imagine that’s a big part of the popularity of mass transit there. I road a Bullet train in 1970 and it was quite comfortable. The suburbs of Tokyo were large apartment complexes several miles out of town and considering the population density of Tokyo the expressway was never crowded.


#150

Doesn’t that take us back to the “mass transit was built for poor people” argument?

;-]


#151

This is a heck of an interesting thread. I’ve studied urban planning as part of degree in public sector leadership, and I find this sort of discussion really interesting. Thanks to all.

I also work at a community college, so I’ve seen firsthand how a car repair can create havoc–students can’t afford the repair, so they can’t get to classes and subsequently drop out due to excessive absences, can’t get the kids to daycare, may lose their job, and so on. It tightened the economic death spiral. Many of my students hold down at least one job while taking full time classes and taking care of kids and aging parents. It breaks my heart to see them try to move up and out of poverty and excelling in their classes, only to see a busted transmission knock them on their butts.

I’ve learned a few things from owning a bunch of craptastic cars (I tend to gravitate towards them) that might work for others who are looking at cars.

  1. Figure out a year’s worth of normal maintenance or stuff that car may need – tires, brakes, hoses, belts, etc. Don’t underestimate. Don’t know? Ask someone who does. (insert plug for the Car Talk Community experts here)

  2. Add in at least 10% for unexpected crap that happens. Forums dedicated to that make/model will usually illuminate the “they all do that” issues. That 10% should increase as needed. (Have I mentioned that I own two Jeep Wranglers?)

  3. Figure out how long you plan to keep it. Do the math on mileage when it’s paid for, and add in maintenance costs. Imagine some door dings and hail damage. That’s the car you’re going to keep, sell, trade or send off on a flatbed to the crusher. Are you still going to like this car when it coughs up a hairball? How about X years from now? Are you going to be upside down forever in this little suckbucket?

Add 1 and 2 to the purchase price. That’s the amount to come up with at the time of purchase and put into savings. No cheating. That amount is your new zero balance. It doesn’t get touched even if you have to panhandle for ramen. When you spend it on repairs, replace it.

If that dollar amount is too high and/or #3 makes you break out in hives, move on to another car.

Already too broke to have it towed someplace, much less put it up on the lift? That sucks. I think it’s going to be one of two choices–help from friends (and strangers) or making a bad situation worse with a payday loan.

I’d love to start a non-profit that creates a co-op/internship for our automotive technology students at a garage that helps people who can pay a portion of the repair bill (I don’t think our college can actually do that sort of work). I’d figure out some form of sweat equity–like community project service hours (volunteering at the food bank, tutoring students, cleaning up the city, roadsides, etc.) as partial repayment.


#152

After touring many European cities I was impressed with the transportation, Now you don’t see many big cars or motorcycles due to economics I suppose, but one has to remember Germany is equivalent in size to the state of Illinois. The population density makes public transportation much more workable. An economically feasable transportation system to service all our population is in my opinion economically unfeaseable. I am still surprised our city offers so much bus service though even though I am on a bus route rarely see busses more than 25% at the most full, and more often than not nearly empty.

I am not in favor of cutting out the service, but like others have noted, I would need 3 bus transfers, and looking at 45 min by bus vs 15 min driving for a 5.5 mile commute, and I do use my bicycle occasionaly in nice weather.

A monthly pass is $60, and every 2 weeks I spend $40 on gas, and that includes additional trips, sure factor in repairs insurance etc. and it is probably a deal, but an inconvenience of an hour a day I choose to afford driving.


#153

There are families that are able to plan and save and prepare for their kids to get an education and for the ambitious and somewhat responsible kids in such families college isn’t too difficult. But am I correct in guessing that such families are in the minority? And as for unexpected expenses like car repairs I suspect that most 40+ year olds are among the group that are the subject of this thread and their college age children usually don’t fall far from the tree.

I am among the pie in the sky crowd who favor state funded community college for those who are ready, willing and able to take advantage of it. And for that to succeed busing would be necessary. There won’t be any car break downs if the students ride the bus.


#154

Elderly retired people who depend on the dividends from stock market investments to supplement social security in order to survive may well have to worry about capital gains taxes.
Not everybody who invests in stocks is rich.


#155

Just for the record, Minneapolis is known as the Socialist Republic of Minneapolis. It has been deep blue ever since Hubert Humphrey’s time. At any rate I think some of the issues here are big city issues and not the same in smaller communities. I went to school in a town of 200K. I bought a VW after high school for $500 and then a 59 Pontiac for $150. I was 200 miles from home but never lived more than a mile from campus. Sure I had break downs where repairs were needed but I don’t remember ever having to walk. Bus service was really too sporadic but my room mates had cars too. Even for the 200 mile trips home, car expenses were really a minor issue compared to tuition, room and board. Now in a large city, that would be different, so again why do we insist on growing cities larger?

A few miles away is a small town with two colleges. Cars are not allowed and if you do have one, they are parked in a separate lot until school breaks. Bus service takes the kids the mile downtown for shopping and pizza and weekend trips to Minneapolis. They never miss classes because of a blizzard or car break down but alas its not free at $30K.

We’ve done a fair amount of stereotyping poor people, rich people, corporations, car owners, and so on, but really there are many different situations. I said I would shut up so I’ll try.


#156

There are low income people who manage to save up a lot of money, and there are also high income people who always seem to be broke and in debt. No matter how much money they earn, they always seem to find a way to squander it.

Or as Keith Richards put it:

“Well I never kept a dollar past sunset,
It always burned a hole in my pants.”


#157

Just for the record, I’ve lived in/near Minneapolis for the better part of 20 years and the only people I’ve ever heard call it a “socialist republic” are the people who kept voting for Michelle Bachmann until she got out of politics to avoid jail.

Almost every, but you’re generally right. They do meet their end, but not before hurting a lot of people. The goal of a humanistic society is to mitigate the pain, not sit back and watch the citizenry pummel each other for sport.

Yes, because money corrupts. It always has, and always will. It’s amazing how much easier it is to avoid serious consequences and often consequences entirely when you’re loaded. This goes double for corporations which have more money than any individual and less to lose.

You can do that when the media gives you free exposure 24/7.

If you’re suggesting that I advocate for socialism/communism, you’re barking up the wrong tree. I advocate for capitalism backed up by strong governmental regulation, and I advocate for higher personal income taxes on the wealthy not only so that they pay more for the society that gave them more, but also so that wealth does not get over-concentrated in the hands of a very few because when that happens the few use their wealth to run roughshod over everyone else.

That, by the way, is not the end-game of socialism, it’s the end-game of laissez-faire capitalism.


#158

Well, then I guess that our experiences have been different.
Several times, I have volunteered to help people with their income tax returns at the local community center, and based on that experience, I would say that it is extremely unusual for genuinely poor people to have invested in equities or mutual funds. Most of the elderly folks whose income taxes I helped to prepare were relying on CDs, with an occasional small dividend from a mutual fund or perhaps a utility stock. None of the younger poor folks had anything other than–perhaps–a small savings account that paid a very small amount of interest.

Among the folks whom I have known, none of the ones who gleaned significant income from mutual funds or equities were poor, and none of the poor had any investments. Your experience, of course, may have been totally different from mine.
:confused:


#159

As bad as things currently are for the great many who find themselves struggling it would appear that the decline will likely continue for them and a great many who will join them in the struggle.


#160

Isn’t this exactly what some have been saying? Personal decisions can keep you poor? 50 years ago people put their money in banks but now those accounts will be losing purchasing power every year. Any amount, $20, $50, $100 a month put into an equity plan over those 50 years would now provide those poor people with a pretty good cushion. Of course everyone has excuses for not being able to put money aside but the reality is it can be done but it requires discipline and a little financial savvy. I can’t tell you how many times I’ve heard someone say “what if I lose money” so they continue to just be cautious and put their money in money markets or the bank where they are guaranteed to lose money in terms of purchasing power.


#161

I agree there are many people who have the means to put something away and don’t. But there are many people (mostly poor) who have $0 to put aside.