It’s time to sit back, relax and enjoy a little joe …
Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.
Another glorious week comes to an end. Off we go …
“Some people use one half their ingenuity to get into debt, and the other half to avoid paying it.”
— George Dennison Prentice
“The conviction of the rich that the poor are happier is no more foolish than the conviction of the poor that the rich are.”
— Mark Twain
Credits and Debits
Credit: Did you see this? A recent survey of Americans between 21 and 75 found that the average net worth they consider necessary to be “financially comfortable” today is $1.4 million. As for the average net worth needed to be “wealthy”? Well … that would be $2.4 million. I suspect many Americans with a net worth in the neighborhood of $2.4 million would vehemently disagree.
Credit: On a related note, researchers have determined that earning $95,000 annually is the magic point at which more money has decreasing returns in terms of our emotional happiness, life satisfaction and overall fulfillment. Call me crazy, but I’ll bet the 80% of the world’s population who get by on less than $10 per day would say that the researchers’ $95,000 figure has one too many zeros.
Debit: Unfortunately, another study released this week found that 43% of US households — 51 million in all — don’t earn enough to afford a monthly budget that includes housing, food, child care, health care, transportation and a cell phone. But other than that, everything is just fine. Kinda sorta.
Debit: Ironically, the large number of struggling American households belies the fact that the last US recession ended way back in 2009 — which means the “teens” decade has been recession free. The bad news is every decade has seen at least one recession since 1850 — for those not counting at home, that’s 16 consecutive 10-year periods. Does anybody else see a problem here? Okay … then how about here:
Debit: You’d think that after nine years of economic “good times,” more than 33% of all Americans would have at least $5000 in retirement savings — but they don’t. Apparently, building up the $1.4 million in assets needed to be financially comfortable today is going to take longer than most people thought.
Debit: Heck, after the US added more than $11 trillion to the national debt during the past nine years, it’s hard to believe that nearly half of all American adults don’t even have $400 in savings of any kind — and therefore a major illness or modest car repair from financial ruin — but it’s true. Obviously, all that debt didn’t benefit the little guy in any appreciable way.
Debit: Of course, many people have pursued a higher education in an attempt to increase their earning power, not to mention their financial lot in life — but the average college student today graduates with $39,000 in student loan debt. Too bad the majority of those students aren’t getting what they paid for.
Debit: All of that student loan debt wouldn’t be so bad if those college degrees being handed out resulted in a well-paying job but, if a study by Harvard and Princeton economists is to be believed, that’s not the case because 94% of all new jobs created between 2009 and 2016 were temporary position — which typically means limited wages and no job security.
Debit: Meanwhile, US demand for credit card loans is at its lowest print in six years, which suggests many Americans may have finally hit their credit wall, which is problematic for those who have been using debt to boost their living standards. Then again, when it comes to hitting walls, I guess it could be worse:
Debit: With that in mind, it probably shouldn’t be surprising to know that the number of credit card delinquencies at small US banks are now higher than they were at the peak of the Great Financial Crisis of 2008. Yes, that Great Financial Crisis. Meh … I’m sure that’s completely irrelevant.
Credit: One thing is certain: The current economic “expansion” may be nine years old and a boon to Wall Street — but it hasn’t done much for the folks on Main Street; many of whom are buried in debt and barely able to afford even the most basic of living expenses. Sadly, this will continue until our dying dollar-based international monetary system finally kicks the bucket and is replaced with something new.
By the Numbers
Some tidbits from the most recent version of Forbes’ annual list of the Top 100 companies, which was released this week:
1 The rank for tech giant Apple.
8 The number of consecutive years Apple has topped Forbes’ list of the biggest companies.
$182,800,000,000 Apple’s current market value.
20 Number of technology companies in the Top 100.
13 Number of financial services companies in the Top 100.
54 Number of Top 100 companies based in the US.
12 Number of Top 100 companies based in the second-ranked country. (Germany)
1 The number of companies China currently has in the Forbes’ Top 100 list.
The Question of the Week
Last Week’s Poll Results
How much was the biggest single charge you ever put on a credit card?
- $3001 to $10,000 (51%)
- $1000 to $3000 (30%)
- Less than $1000 (13%)
- More than $10,000 (6%)
More than 1300 Len Penzo dot Com readers responded to last week’s question, and slightly more than 1 in 20 big spenders said their biggest single credit card charge was for more than $10,000. Let’s hope they paid it all off before the end of the month — otherwise, any rewards they scored for racking up such a large charge most likely ended up being all for naught.
Useless News: Wants to Wed
Little Johnny and Susie were only 10 years old, but they just knew that they were in love. One day they decided that they wanted to get married, so Johnny went to Susie’s father to ask him for her hand.
Johnny bravely walked up to him and said “Mr. Smith, me and Susie are in love and I want to ask you for her hand in marriage.”
Thinking that this was the cutest thing, Mr. Smith replied, “Well Johnny, you are only 10. Where will you two live?”
Without even taking a moment to think about it, Johnny replied “In Susie’s room. It’s bigger than mine and we can both fit there nicely.”
Still thinking this is just adorable, Mr. Smith said with a huge grin, “Okay then how will you live? You’re not old enough to get a job. You’ll need to support Susie.”
Again, Johnny instantly replied, “Our allowance… Susie makes 5 bucks a week and I make 10 bucks a week. That’s about 60 bucks a month, and that’ll do us just fine.”
By this time Mr. Smith was a little shocked that Johnny had put so much thought into this. So, he thought for a moment trying to come up with something that Johnny wouldn’t have an answer for.
After a second, Mr. Smith said, “Well Johnny, it seems like you have got everything all figured out. I just have one more question for you. What will you do if the two of you should have little ones of your own?”
Johnny just shrugged his shoulders and said, “Well, we’ve been lucky so far …”
Other Useless News
Here are the top five articles viewed by my 19,995 RSS feed, weekly email subscribers, and other followers over the past 30 days (excluding Black Coffee posts):
- A Simple Trick to Get Credit Card Interest Charges Waived
- 18 Things You Supposedly Should Never Pay For. Ever.
- 8 Misleading Claims People Often Make to Close a Deal
- 5 Ways to Become More Money Conscious
- 5 Ways to See Disneyland or Disney World on a Budget
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Letters, I Get Letters
Every week I feature the most interesting question or comment assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach out to me at: Len@LenPenzo.com
This week, Randy took a few moments to fill out a Len Penzo dot Com complaint form:
“Here in Kansas we’re tired of the ‘dumbing down of America’ by morons and it appears you fit in that category.”
You expected something different, Randy? After all, despite its numerous problems, I willingly choose to live in California.
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c
RD Blakeslee says
“1, The number of companies China currently has in the Forbes Top 100 list.”
The Forbes rankings are in dollars. China (and others) are working hard to displace the dollar as the world’s primary reserve currency.
China now allows its yuan to be exchanged for gold, when petroleum is the commodity traded using the yuan. If and when the yuan is generally backed by gold for all international transactions and displaces the dollar, will there only be one “Forbes Top 100” Chinese company?
I doubt it.
Fiat currencies = ephemeral pricing.
Len Penzo says
Great point, Dave. When the dollar finally ceases to the world’s premier reserve currency, there are going to be a lot of changes that most people here in the States would think are impossible today.
Sara King says
Hi Len! I hate hornets. They love to ruin my picnics!
Thanks for another great Black Coffee. Enjoy the long weekend!
Len Penzo says
They are little buggers, aren’t they, Sara? I once accidentally ran into a hornets nest in a wooded area and they chased me for about 100 yards. By the time they were done with me I had about a dozen stings on my face and head!
The average household income in the US is around $50k. I can honestly say I would be completely happy earning somewhere around $70k per year.
Funny. I thought $95,000 was too low. I think I’d need an income of at least $120,000 to be in financial nirvana.
Len Penzo says
Just for the record, I think the $95,000 figure was individual income, rather than household income.
why save … the banks pay ZERO INTEREST … this was always about enriching wall street and the richest 0.1%. this is going to end in a very very bad way
Wide Awake says
Yes. Human beings will only do that which is in their perceived immediate or long term best interests and saving money today is a lose lose situation. Our savings are subject to high taxation (including principle if you invest in an IRA or 401K) and interest rates that are insufficient to keep up with inflation. As long as these emergency central bank policies remain in place the savings rate will keep being low.
It is true your savings lose ground today to inflation, let alone generate any income from it like it used to be once upon a time. It’s also true that taxes and health costs will keep going up, and Social Security only provides a poverty level standard of living for most people. But that’s all the more reason to live well below your current income and save! Even if you have to put your cash in the mattress. A disciplined saving approach forces us to live a less expensive lifestyle. Living in a modest home with a 10 year old car isn’t all bad. I’ve got zero debt, and no financial worries which translates into a stress free lifestyle.
People can’t save money they don’t have.
It’s all about priorities.
Any one carrying cc debt and paying 29% interest each month has their priorities screwed up. Quit being a slave to the banksters and cc companies. Paying debt down and saving is pretty easy if you can eliminate most or all of your discretionary expenses (like meals out) and pay down that debt first. When the debt is gone, pay the cc balance in full each month or just pay for everything with cash.
Living within your means is virtuous. Life is more enjoyable without a lifetime of debt hanging over your head. Plus, it’s good to know you’re not lining the pockets and greed of the banksters.
David @ VapeHabitat says
For me, earning $100,000+ a year is already a success. I need little to be happy. But I wouldn’t mind having 1-2 millions
I’m with the others here. The biggest financial problem the US has today is that the vast majority of its people are ignorant about economics and basic personal finances. If people were taught basic personal finance in high school or sooner, they’d live within their means and stop splurging on stupid things like annual trips to Disney World (saw your article on how to save on a trip there), the new car they feel entitled to own every 4 or 5 years, eating out five times a week, or anything else that drives them to the brink of bankruptcy.
Len Penzo says
Point taken, Steve. Yes, it would be nice if the public schools to taught kids about basic personal finance, but the good news is a basic personal finance education is something that can be taught at home by most parents.
Len, I don’t think you’re a moron.
Len Penzo says
LOL! Aww … thanks, Jason!