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alstry (35.41)

Americans Practically Taxed 100% of Incomes

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April 01, 2009 – Comments (41)

SACRAMENTO (AP) -- California residents will pay one of the highest sales taxes in the nation after a 1-percent tax hike goes into effect to help the state bridge a record $41.6 billion budget deficit.

Taxed 100%???  Well not exactly....but let's see how much taxes, interest and insurance consume of the average families income.  Let's apply this to a self employed family of four earning $100K per year living in a half a million dollar home with a $300K  1st mortgage and $50K HELOC

TAXES

FICA and medicare takes about $7,500 per year or 7.5%.

Federal and State Income Tax @ 35% or $35,000.00

Property Tax $6,000 per year

Sales Tax, Gas Tax, and Misc.....$1,500 per year

Total Taxes approximately $50K per year or 50% of gross income(the number grows for high income earners)

INTEREST

$300K mortgage @6% = $18,000 per year

$50K HELOC @ 6% = $3,000 per year

2 cars w/ $40K financed @ 7.5% = $3,000 per year(depreciation would make this number explode)

Credit Cards w/$10K balance @ 10% =$1,000 per year

Total Interest payments approximately $25K per year.

INSURANCE

Homeowners $1,500 per year

Auto  $2,000 per year

Life Insurance.....$500 per year

Health Insurance  $12,000 per year (assuming family health and no preexiting conditions)

Total Insurance Costs  $16,000 per year

This family, which earns twice the income of the average family, with not so out of this world leverage, and average health insurance spends 91% of its income on taxes, interest, and insurance.  This family doesn't have a boat, second home, or pre existing health condition which could easily double the health insurance costs.

After paying taxes, interest, and insurance......the above family has about $750 per month for food, clothing, utilities, home and auto maintenance, gasoline, travel, cable TV and internet, and entertainment. 

After gasoline and utilities, there ain't much left to live on...........now you know why America has a negative savings rate......or must borrow money to make ends meet.  Over the past eight years, expenses have exploded and incomes have remained stagnant or even decreased.

Debt, Taxes, and Insurance is suffocating America and its citizens......after paying utilities and gasoline, there is barely anything left for food without being forced to borrow.......now that jobs are being cut and incomes slashed......how many BIG screen TVs do you think people will be buying in 2009????????????????????????????

In my neighborhood, property taxes just went UP 10-15% even though home values declined due to special assesments.  Friends tell me their health insurance premiums increased 15%.  Now states are increasing sales and income tax......all this over an economy where wages are declining and jobs cut.

For those of you that have been wondering why so few can save in America these days.....now you know why.....as a society, the vast majority of our incomes goes to pay the government and financial institutions of one sort or another.......BEFORE we can spend a dime on ourselves.

Now you know why people are saying FU....because they are FED UP!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Whoops....I made a mistake...for a self employed family....FICA should be doubled......now where does that leave us???????????????????????????????????????????????????????????????

Get ready for 70-90% of America(including state and local governments and business) going bankrupt.....only after we bring debt and insurance into balance....can we start growing our economy again.

41 Comments – Post Your Own

#1) On April 01, 2009 at 1:29 AM, QualityPicks (63.56) wrote:

You are so right :) I keep saying it: 100k a year and you are nobody. That used to be "a lot of money" :) In Irvine you wouldn't even be able afford an entry level town-home, even after a 35% price correction. So sad.

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#2) On April 01, 2009 at 2:33 AM, Scotbgaw (80.48) wrote:

Overall your point is sound, and I agree wholeheartedly. One problem though.....you forgot their student loans!

P.S. A lot of those line items are acutally tax deductions that would significantly reduce the federal tax burden (~25K in your estimate), and if they were self-employed virtaully all of those expenses would reduce taxable income.  Still, the picture is morose.

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#3) On April 01, 2009 at 2:35 AM, tonylogan1 (27.92) wrote:

Agree, and that is why there is going to be a ramping up of the mass exodus (of legal citizens) from California. You can save 20-25% of your tax bill just by moving to bearby lower taxed states then have a lower cost of living as well (buy a house for 1/3 the price, etc.)

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#4) On April 01, 2009 at 2:40 AM, tonylogan1 (27.92) wrote:

bearby = nearby

also, I think you way underestimated sales tax. In Los Angeles, it was just raised so we are over 10% starting today. On 100k income, it is more likely you will approach $3000 in sales and misc taxes. (I include parking fees, fines, traffic tickets, etc in this cost)

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#5) On April 01, 2009 at 3:19 AM, Eudemonic (67.22) wrote:

Did that legislation include any mandated budget cuts? Sounds like Prop13 brooha revisit time for the 21st Century.

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#6) On April 01, 2009 at 7:58 AM, alstry (35.41) wrote:

Thanks for the input so far...

I am sure I am high in some areas and low in others, but over all you get the picture.  This is something I saw about 4 years ago and knew things would get REALLY bad once insurance and gas costs skyrocketed and wages declined.

Until we restructure our economy, millions more will contract the FI virus.  GM could be a good first step....but if we cut wages and let everything else stand...practically every family in America is bankrupt or soon to be bankrupt.

Remember, the average income of the average family is only $50K per year.

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#7) On April 01, 2009 at 8:08 AM, TDRH (99.67) wrote:

Damn, they are all going to want to move to Texas now.

*No state income tax.

*No personal property tax on vehicles.

*No sales tax on grocery item. (ie 100% orange juice, milk, flour)

 It adds up over time. 

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#8) On April 01, 2009 at 8:49 AM, Gemini846 (58.67) wrote:

You underestimated the FICA I think. If they are SE they are subject to SE tax at another 7.5%.

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#9) On April 01, 2009 at 12:31 PM, lenri (72.39) wrote:

Viva la Left Coast! The seals and the coyotes will be the only inhabitants in the future.

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#10) On April 01, 2009 at 2:04 PM, briyan (30.77) wrote:

Certainly the people in your ficticious example are living beyond their means, and I think the same applies to most of the people in the United States.  With the numbers given, this household would be struggling because they spend far too much, not because they spend responsibly and the government rapes them.

But, I think you were way off on the figures, especially pertaining to taxes and deductions. 

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#11) On April 01, 2009 at 2:18 PM, bigpeach (29.27) wrote:

I mean no disrespect, but since people seem to be listening to you, I must point out that your figures are wildly inaccurate. Most notably the income tax and health insurance, which makes up more than half of your total. On the income tax side, you're completely ignoring the graduated income tax and the many deductions that a family of four with all the things you mentioned would have. The real figure would be more like a third of the $35K you're quoting. As far as insurance, it's not necessarily wrong per se, but there are virtually no families in this country that pay for full coverage entirely out of pocket.

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#12) On April 01, 2009 at 2:22 PM, bigpeach (29.27) wrote:

Not to mention, 100K doesn't get you anywhere close to the top tax bracket. That would put them in the 25% marginal tax bracket.

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#13) On April 01, 2009 at 2:34 PM, UrbanJackBag (82.53) wrote:

Including insurance as a tax is completely wrong.  You are basically saying you get nothing of value for the premium you pay.  I will say that insurance should not be compulsatory, - you should get to choose whether you buy it.  If I have to sue you to get any money you do have, I will do that.  Most insurance serves a purpose, except for PMI.

 

Bigpeach's other comments are dead on as well.

 However, the premise that we are overtaxed is completely correct.  We are just feeding a big bureaucratic beast that is constantly hungry.

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#14) On April 01, 2009 at 3:11 PM, alstry (35.41) wrote:

bigpeach,

Don't worry, Alstry is the Doctor of Alstrynomics and he isn't easily offended.

The Tax rate I used included state tax as well as federal tax.  Any reduction in the marginal tax rate would more than be offset for my failure to appropriately apply self employment tax.

As far as the insurance, you are dead wrong...my wife is a full time school teacher and we pay out of pocket $10K per year to supplement for family coverage.  MOST of my friends pay upwards of $15K per year for non group family coverage and those with any kind of preexisting condition pay North of $20-25K per year.

UrbanJack...

Whether you like it or not insurance is compulsory...to drive a car, get a mortage, or demonstrate ability to pay if you want medical treatment.

If you get caught by the police driving without insurance, my suggestion is plead not guilty and hire a competent lawyer to defend you....good luck.

Life is what it is and we can't cahange it.

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#15) On April 01, 2009 at 4:45 PM, OctoStalin (41.08) wrote:

Alstry, try living in London. Taxes are just as bad and the cost of living is ludacris.

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#16) On April 01, 2009 at 4:47 PM, bigpeach (29.27) wrote:

For the sake of argument, here's a more realistic income tax figure using your numbers.

State sales tax for CA: $9,300 (Most states pay less than half that) 

Federal taxable income after deducting state income tax, property tax, sales tax and mortgage interest: $65,200. This family would have more deductions than this of course.

Federal income tax for married filing jointly:  $11,395

Interest payments are also over stated, however the insurance premiums for Life and Auto are understated, so I'm going to assume this is a wash. Making these changes, their monthly disposable income is more like $2000, which seems like a livable amount.

I don't disagree with your points that we are too heavily taxed and over leveraged, but we don't need to exaggerate the numbers to make it. 

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#17) On April 01, 2009 at 5:46 PM, alstry (35.41) wrote:

big....using your numbers

Fed 11,300

State  9,300

Self Emp....15,000

Total Income and FICA Tax.......$35,000

Most families would pay much higher sales and misc taxes than I have allocated.  I have not included license plate taxes....in CA it is insane.... I could go on and on for what I have omitted in other areas.

My health insurance figures are conservative for self employed people....

Many people have to spend thousands of dollars per year on gasoline just to get to and from work to earn enough to pay taxes.

If you think the above family living in a decent house has $2K of disposable income....you are not living in the U.S. nor are you self employed.

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#18) On April 01, 2009 at 6:03 PM, lquadland10 (< 20) wrote:

you forgot gas tax cigarette tax liquor  tax. hunting fees, fishing fees, oh and now you will have to add the carbon trading tax. gun fees eletric tax cable tax cell phone tax. school tax and what not.

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#19) On April 01, 2009 at 6:28 PM, Jim5769 (69.62) wrote:

The amounts given in this example are wrong, as noted by several other respondents.

If you are a family of four making only $100k in California, a high cost of living state, you can't afford $350k in mortgage and home equity line of credit loans. This example family is living beyond its financial means. This being said, being self-employed does open a lot of tax deduction possibilities that the normal wage earner does not have. These deductions appear to have been ignored by the creator of the post.

For $100k in income, this family should probably have no more than $250k of home loans. Time to downsize!

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#20) On April 01, 2009 at 6:30 PM, Donnernv (< 20) wrote:

Alstry:

Interesting topic,  A while ago, I prepared a comprehensive analysis of all taxes by income class (e.g., top 1%, top 10%, top 25%, top 50% vs. those not in each income category).

Then, I laid against these taxes (by income group) the benefits received back.  Tax monies are not burned.  They are spent for things that benefit one or more income groups equally, or not equally.

Simple examples.  Military expenditures benefit all citizens equally.  They protect our butts equally.  Medicaid benefits lower income citizens disproportionally.

From this analysis, the concept of net benefit was introduced, and could be calculated.  It's far too big to jam into a blog, but if anyone is interested in a copy, email me with your email address.  I don't believe such an analysis has ever been done before.

Donnernv@aol.com

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#21) On April 01, 2009 at 6:40 PM, norenore (< 20) wrote:

I reject the premise. Taxes are not "taken" from us. They are returned in the form of benefits and services. FICA, for instance, is mailed back to you as checks at age 65. Hardly onerous that the government prevents you from being destitute in old age. People in the 1930s had no safety net, but today we do. (And the wonders of 401Ks don't seem so wonderful -- good thing social security is there as a backup) Many would argue we need more.

The only issue is whether the services are equitable and benefit society as a whole.

But we can't take a narrow or selfish view of services -- ie. I don't have children, so I object to tax money going to schools. Society needs educated children. That is an untenable and selfish view that society at large rightfully rejects.  Similarly, we expect police, firefighters and hospitals to run. We expect potholes filled, and wars waged on our behalf. 

Taxes per se are NOT bad. They are necessary for a civilized society. The question is how our money is spent. Special interests ruin this equation by syphoning off public money for some people that don't benefit everyone in general. We want our money used wisely and to benefit us generally. 

 I do agree that the middle class is being squeezed, but not by taxation. Rising costs -- especially health care -- and stagnant wages, are the culprit. My father ran a small business, but small group or individual insurance plans are murderous. Health care, in my view, is killing small business. For many, it is too big a risk financially. If you work for a corporation and get cancer, you will be covered. If you are self-employed, you might lose your house. This is killing small business, which is the engine of our economy and the biggest creator of jobs. 

 

 

 

 

 

 

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#22) On April 01, 2009 at 6:47 PM, Jim5769 (69.62) wrote:

I would like to add that the marginal rates do not reflect what is ultimately paid as a percentage of taxes (the effective rate).

Differences between Taxable Income, Adjusted Gross Income, and Total Gross Income also need to be considered here. The AGI and the lower Taxable Income amount calculated from the AGI are lower than the Total Gross Income the family receives. The example incorrectly used Total Gross Income instead of AGI in the tax calculation. The family might earn $100k, but the AGI is probably more like $95k and Taxable Income is probably $75k or less thanks to deductions and credits.

My point is that the effective tax rate for this family is probably closer to 10-15% of total gross income (including state), not 35%.

 

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#23) On April 01, 2009 at 7:00 PM, bigpeach (29.27) wrote:

Alstry, that's not right either. If we assume the person is self employed, they can also deduct health insurance premiums and half of their self employment tax. Additionally, the self employment tax covers FICA and medicare so you've erroneously added an extra $7,500 for that in your original analysis. So, with those two extra deductions we now get a taxable income of $45,700 for a federal income tax of $6,050. Combined with subracting the $7,500 from you're original numbers, we're roughly back where we were if we assume the person is not self employed.

You say you're being conservative with your assumptions, but I disagree. You've taken a snapshot of a family that lives beyond their means, is clearly in their peak leverage years, and you've assumed leverage remains constant. Let me give you two examples:

15 year 300K mortgage at 6%

Interest year 1: $17,654

Interest year 2: $16,896

5 year 40K auto loan at 7.5%

Interest year 1: $2,768

Interest year 2: $2,236

That's an extra $2,000 they have next year from paying down their loans.  

See what I'm driving at? The snapshot you've created not only contains some bogus numbers, but would last for only a brief time.

bigpeach 

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#24) On April 01, 2009 at 7:36 PM, alstry (35.41) wrote:

Actually Bio....Self employment tax is 15+% up to almost 100K....it is only 7.5% if you are an employee and your employer picks up the difference.  My original presentation made this confusing.

I appreciate you amortization table but increases in property taxes and homeowners insurance pretty much covers that one....and if you lived in Florida or any where near the water....my homeowners insurance estimate is thousands off.

You are really splitting hairs in the end because for every dollar you reduce I could EASILY add $2 in the Taxes, Interest and Insurance basket......trust me on this one....

And in the end, we are still dealing with a family that earns in the top quintile of all income earners....there is still 80% of the population below them getting squeezed even more.....

We have created a disincentive to work in America because you are often financially better off getting government assistance compared to making an average or slightly below average wage.

Donnerrv....I understand your point...there are a lot of benefits to taxes.....there are even benefits to redistribution of wealth...but the big issue right now is that TI&I is consuming so much money that there is little left to spend anywhere else.

You will see this in the sales numbers going forward as consumers can no longer tap lines of credit to bridge the widening gap between income and necessary expenses.

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#25) On April 01, 2009 at 7:48 PM, alstry (35.41) wrote:

Follow up....

in my world....most everyone falls under AMT and ALL deductions are excluded....VERY few pay much less than 37% of gross income and many pay OVER 40%.....but the incomes are much higher than 100K per year....especially when you figure investment gains......

Further, I have friends whose home property taxes on vacation homes exceed $50K per year in Michigan due to non homestead surcharges.

Many have property taxes in the $10K to $30K range.

Many of these people have seen their incomes and net worth evaporate in the last couple years.....especially those who made a living in real estate or a business related to real estate.  If my guess is right, in the next 12-24 months.....we are going to see a flood of higher end homes hitting the market all over the nation.......

The funny part is.......even if you gave those homes to people at no charge and free and clear of any mortgage.....most couldn't afford to pay simply the property taxes and mainenance on the property.

America faces some very interesting issues in the next 12 months.....VERY INTERESTING ISSUES.

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#26) On April 01, 2009 at 8:21 PM, tonylogan1 (27.92) wrote:

Jim5769 (35.16) If you are a family of four making only $100k in California, a high cost of living state, you can't afford $350k in mortgage and home equity line of credit loans. This example family is living beyond its financial means...

That is the point of the problem... The high cost of living in California is becuase a $350k house here would cost $60,000 on average in the rest of the country. The whole thing got way out of whack. 

Now, the state is still trying to collect taxes on the "out of whack" amount, and it jsut isn't going to work.

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#27) On April 01, 2009 at 8:28 PM, tonylogan1 (27.92) wrote:

One more thing...

There is a reason they don't sum up all your taxes and just make it one round number, and that is because the total amount you pay in taxes is so large that people would absolutely object if they saw that 70% of their pay came out of their check as "TAX".

Instead it is broken down into 100 or more categories, all of which are taxes, then to add insult to injury, add the worst tax of all inflation.

History has shown revolutions occur when the tax burden on the people reaches a certain point. The government has gotten very good at hiding the true tax rates.

"Inflation is the tax they use when they are already taxing you as much as they think they can tax you, but they still haven’t taxed you enough" - tonylogan 2009

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#28) On April 01, 2009 at 9:03 PM, bigpeach (29.27) wrote:

Splitting hairs? Alright, I'll play along, after all, this family is in dire straights and I'd love to help them out. The biggest error you made is assuming the self employment and FICA taxes are different. They're not. The self employment tax is FICA and medicare, you double counted.

So, the tax totals are:

15000 + 6000 + 6050 + 1500 + 9300 = 37850

Not 50K.

Since you are underestimating insurance so badly, let's double it, bringing it to 32K. I think anybody here would agree I'm giving you quite a concession with this.

Sorry family, but you can't afford that house anymore, and as your financial advisor, I say you have to trade down. You can only afford the median CA home price of 224K.  http://www.latimes.com/business/la-fi-sfhomes20-2009mar20,0,1016309.story

Fortunately you have 200K of equity in your home, can pay down all of your revolving debt, and have 100K left over for a down payment.

So, the numbers are:

Insurance: 32K

Interest: 10K

Tax: 35.2K 

Leaving them with.... 23K annually, or about 2K per month. Sounds like they'll be okay!

As for your friends who "have incomes much higher than 100K per year" and have to pay taxes on their vacation homes, I have no sympathy.

Your argument about taxes and healthcare could have merit, if only you didn't try to back it up with numbers that are demonstrably false.

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#29) On April 01, 2009 at 9:12 PM, bigpeach (29.27) wrote:

Made a mistake. Interest is 8K. 7K if they get a 5% loan, which now they can.

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#30) On April 01, 2009 at 9:20 PM, OneLegged (< 20) wrote:

Isn't a 10% (say) sales tax on after-tax income actually much higher than 10%?  Almost all of the "fees" listed above are paid with after-tax money.

 

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#31) On April 01, 2009 at 9:35 PM, alstry (35.41) wrote:

Lets keep it clear...in my recent example self employment tax is FICA and medicare and the rate is about 15%.......no double counting. 

So the totals are 15,000 SE, 15,000 Fed, , $7000 State, $6000 Property, and $2000 Sales Tax and misc (I bumped it to be more reflective of people's true buying habits and license tab fees) totaling $45,000.

I concede $5K in taxes......but that equals the depreciation in their vehicles which are necessary for them to earn an income.

Who said they have any equity in their home???  What was a half a million dollar home a couple years ago is not $250K in many areas...some areas even less...you know...the median CA home you are talking about.

....over 30 million homes were sold in the past five years that are likely worth less than the person paid.

For the above example, let's say our family purchased a half a million dollar home put 40% down a couple years ago(you  know...self employed and wanted to be conservative) and now the home is really worth half of what they paid....less than they owe on the property.  I estimate over 20 million homeowners currently are underwater in additon to the millions of homes that have already been foreclosed.

So basically our family can't sell their home without depleting any little savings that may be left to pay off the mortgage and HELOC.....now why do you prefer living in fanstasyland versus the reality of Alstrynomics?

And in case you go this route...........

And any retirement that they may have had is now depleted substantially...once you factor penalties and taxes...it likely is not enough to pay off their debts.

 

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#32) On April 01, 2009 at 9:43 PM, alstry (35.41) wrote:

Remember....we are dealing with a family in the top quintile of income earners....I guess you don't give a damn for the remaining 80% of the American population who can be facing even tougher challenges.....

especially if they moved in the past five years and purchased a home.

Further, I think you are missing the point...there are other necessary expenses which are not even addressed like utilities....gasoline......which can more than consume the remaining disposable income of our above reference families before we got to food, clothing and other expenses.....

Based on your analysis....you probably don't agree with my red thumb of Best Buy...maybe???????

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#33) On April 01, 2009 at 10:28 PM, bigpeach (29.27) wrote:

I don't know man, I hope you're not taking this personally. There's nothing personal about it, but now you're making up numbers and changing your original story. I've clearly demonstrated that their federal income tax is 6K, not 15K. You've also shortchanged yourself on the state tax, and are mysteriously changing the misc. tax. The tax value is 38K and no made up numbers will change that.

You can't include depreciation on vehicles. Doing so is no longer a snapshot but a projection, and would change this from a simple cash flow analysis to a net worth analysis. If you do that, you must include home price appreciation, investment gains, wage increases, inflation, etc. The net effect of which swamps vehicle depreciation.

Your post said they lived in a half a million dollar home with a 300K mortgage. Subtraction yields 200K of equity. If you're going to change your mind, then I will point out they should not have been so leveraged in the first place. Time for them to rent.

The family in your example has in excess of 2K per month to spend. You simply cannot find more than that of reasonable living expenses.

And I don't agree with the price you red thumbed BBY at. The market seems to disagree with you too. 

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#34) On April 01, 2009 at 11:00 PM, alstry (35.41) wrote:

They did live in a half a million dollar home when they started....and to them it is still a half a million dollar home...and it is taxed as a half a million dollar home...but if they actually wanted to sell it, as you suggest, to another human being in the real world...it could only fetch $250K.  If the current sale value was half a million....they would have paid $1 million and the mortgage would have been $600K applying the same ratios...which was not an unheard of leverage in the past few years and actually occurred often IN REAL LIFE.

Cash flow is cash flow....and it is what it is....you can't liquidate what is not liquid....and half a million dollar homes can only sell for $250K today in many parts of the country.

Applying your numbers to taxes and insurance....$38K in taxes and $32K in insurance..... and since they can't sell their house without declaring bankruptcy....$25K in interest...That takes us to $95K out of $100K for taxes, interest, and insurance.

That brings us to about $400 per month for utilities, gas, food, clothing, maintenance, and all other expenses not related to Taxes interest and insurance.

You seem to be digging a deeper and deeper hole for yourself without including depreciation on the vehicles.  Do you think that I would ever play a game where I didn't know in advance that each time you opened your mouth you would fall further and further behind?

And as far as BestBuy...I have high confidence that you will eventually agree with me....you just seem to be a little slow on the uptake.

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#35) On April 01, 2009 at 11:06 PM, RookieQB (28.78) wrote:

100k Definitely isn't what it used to be.

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#36) On April 01, 2009 at 11:22 PM, alstry (35.41) wrote:

Imagine a family of four living on the median income of $50-$60K per year.

Now..millions of small business owners, real estate agents, and mortgage brokers who were earning six figures are now making less than $50K per year.

Soon local governments across America will be cutting 10% of wages of millions of employees.  If they can't meet expenses at current wage levels....millions of FUs after wage cuts.

Prepare for 70-90% of ALL American citizens, businesses, and local and state governments going bankrupt in the next 12-24 months.

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#37) On April 02, 2009 at 12:11 AM, bigpeach (29.27) wrote:

Yeah, I don't know, you've changed your story so much it's hard to keep track. So we're now assuming they bought at the peak of a bubble, and have lost more on the value of their home than the average home in California has. Sounds unlikely but I suppose it's a reality for a small number of Americans. Gonna be a tough couple of years for this family. What I can't figure out is that if after all these expenses, how have they lived for the last three years? Sure their home is worth less now, but their cash flow is still the same. So if they were making it before, why can't they make it now? Maybe we should change the story and say they were making 150K before? Maybe they were funding their expenses with that HELOC and CC debt? Sounds like they shouldn't have bought the home, or the two expensive cars in the first place since they could never afford them in the first place. Well, fortunately for them I was generous enough to give them 24K for health insurance. They can get rid of that and get by until they have paid down their excessive debt. 15% of the country doesn't have health insurance after all. I think most of them are still alive. Selling their home at a loss and renting for a while is still financially beneficial. Gotta tighten the belts in tough times.

Your concept of how much wealth is needed to exist is bizarre. Millions of families live comfortably every day on a 50K income, without going into debt. They buy used cars, they rent, they get health and life insurance through their employers, they watch their spending. With prudent decision making, they never got themselves into the predicament you describe in the first place. You've presented an example that applies to a tiny fraction of the population.

I'll make a bet with you that 30% of American citizens, businesses and governments don't go bankrupt in the next 24 months. Loser runs naked through the streets of a city you choose.

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#38) On April 02, 2009 at 12:29 AM, alstry (35.41) wrote:

Now you are making value judgments.....I have no problem with that......my values tend to parallel yours.

But Alstry is the Doctor of Alstrynomics....value judgments play no role in dianosing and treating a patient or economy in serious condition.

Soon 25% will not have health insurance....that means your $24K for health insurance will have to go up to $30-36K to make up for the uninsured.......

Bizarre.....now you are talking my language.

What about the millions of families that have lost their jobs.  Please read my most recent post.....
Tens of millions more families are about to lose their jobs and or get substantial paycuts.

I have already been chased for streaking in my younger days...been there done that....

This is not a prediction I like to make...it is just my diagnosis of an illness where 70-90% of America's citizens, businesses, and state and local governments are either highly leveraged or dependent on leverage to function.

It is really not very difficult to see.....30%???.....please make it a number that is actually difficult to achieve.

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#39) On April 02, 2009 at 2:01 AM, briyan (30.77) wrote:

I agree with alstry that we have a lot of hardship coming further and further up the "wealth ladder" as incomes dry up and people struggle to pay their monthly obligations.

But I can't agree with an assessment of the example family unless they are described as living well beyond their means. They are not being put in the poorhouse by the government tax policies... they are doing it to themselves. That's the thing with taxes -- they don't come out of nowhere, you know they exist in advance and you factor them in to what you purchase.  

This household with a $100k annual income has no business living in a $500k home and carrying around a $50k HELOC and $40k of vehicle financing.  Of course, that is the point, I guess ... too many people in this country have been living over-extended like this for too long.  I expect very bad things as it all unravels.  

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#40) On April 02, 2009 at 10:48 AM, tonylogan1 (27.92) wrote:

Alstry, I hope big peach is not an alter-ego you made up so you could beat him down in this debate...

Altry's whole point is that there are tons of people who you think are living fine but actually are HELOC'd to death. There are tons of people that will be foreclosed on that purchased houses over 30 years ago. These people did not pay down their loans, they ran up credit cards and once a year transferred the balance to their home loan balance.

This was VERY common and I hope it comes to an end, but I do not suspect it will because this voluntary debt slavery is very nice for the banks.

If bigpeach is real, I would invite him to prepare my California taxes this year and see if he can manage to get me down to only $6k in federal tax liability. EVER heard of AMT? They dont let you deduct $50k off of $100k of your income... though some may try...

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#41) On April 02, 2009 at 11:35 AM, alstry (35.41) wrote:

If I ever make an alter ego....I promise everyone will know....:)

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