5 Years of Obama ... the Middle Class has LOST wealth

The Typical Household, Now Worth a Third Less

Excerpt:

Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too. The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.

Comment: Link in article above it to full PDF of the study. Images are snips from the study. Why? [My view which is not from the study]: 1. The economy has stagnated; 2. Wages have not grown even to the rate of inflation; 3. Employment has not rebounded; 4. Obamacare milks more from the middle class than it returns;

Annual Net Worth Statement

Comments:

• Years ago I took a college level personal finance class. It was a lot of work but I learned so much as well. My professor recommended that January 1st would be good day to update and review one's personal net worth statement.
• Kathee and I do this every year. Because our finances are not that complex I could easily update ours in less than 15 minutes.
• The above (should be obvious) is just a sample ... not mine. Mine is private between my wife and me.
• Suggestions
  • I don't include cars. One could easy enough. The asset value of a car could be deduced from websites like Kelly Blue Book or Cars.com. If one has a car loan that has to be included.
  • Include student loan debt. Simplified sample excludes
  • I do not include home furnishings. (They are worth less than one might think!)
  • For home value consider zillow.com. For our's I take the Hennepin County property evaluation. To be even more conservative multiple by .94 to get the value sold (after real estate fees)
• We track year by year going back several.
• January 1st is also a good time to know one's credit score. We use MyFico.com
  
  
• For the Christian, one's finances (net worth) is not the most important thing. But it is a helpful discipline.

Other thoughts:

• It's wise to review one's expenses over a course of time. And if one budgets to review and adjust the budget. We use an aggregator service call yodlee. I export a year's transactions and sift / manipulate that data to come up with budget numbers.
• Budgeting: We have targeted amounts for key categories like clothing, housing, et cetera
• We project out our travel plans and estimated amounts. For example this year we hope to travel to Florida to see Kathee's brother.
• It's good to have liquid reserves. We use INGDirect and have separate savings accounts for Travel, Christmas and gifts, Auto Repair, Auto Replacement, and Taxes and Insurance. One never knows when the transmission will fail, one will have unusual medical expenses, et cetera. We automatically transfer weekly into all of these accounts.

Are you a Ri¢hie Ri¢h?

A Look at Household Net Worth and Household Income By Age Group from the 2010 Survey of Consumer Finances
  Excerpt:

The median American household earned $45,800 pre-tax. So if your family generates more than $3,817 per month in pre-tax income (before payroll taxes, retirement savings, and other reductions), you are in the top half of society. You are in the richest 1 out of 2 Americans. ...

To ... rank in the top 5% of households (making you richer than 95 out of 100 families), you and your spouse need a combined pre-tax income of $205,300 and a net worth of $1,864,100.

.. What is fascinating to me is the fact that for the 35-and-under household group, median net worth is only $9,300. That is all it takes to have a higher net worth than half of people in the same demographic. It’s insane. Short of catastrophic health problems or unexpected tragedy, the only reason someone should have a net worth that low by 35, a full 17 years after they entered the work force, is because they spend too much money. This is a cultural problem. Thriftiness, self-sufficiency, and independence are not valued and taught as they once were.

... Roughly 9 out of 10 young people 35 and younger don’t have a stock investment account. At the very moment in life when time is at its statistical greatest, when stocks and long-term investments have their most value, they are completely neglected.

Comments: Image is 1st edition of Richie Rich. From a closely related article: To Earn More In Dividend Income Than 50% of the World Earns Working Each Year Requires Only 1,074 Shares of General Electric. Ultimate riches is to know the Lord Jesus Christ:

• For there is no distinction between Jew and Greek, for the same Lord over all is rich to all who call upon Him (Romans 10:12)
• For you know the grace of our Lord Jesus Christ, that though He was rich, yet for your sakes He became poor, that you through His poverty might become rich (2 Corinthians 8:9)
• In Him we have redemption through His blood, the forgiveness of sins, according to the riches of His grace (Ephesians 1:7)