Stan Geiger

Being Thrifty: Sounds Good on Paper

Jeff Shaw has an admonition and some advice for Americans. He condemns excessive spending and borrowing while advocating saving and investing. I dig his point. But there is a major hole in his thinking: He can't see the working class.

Mr. Shaw wrote:

No one saves money. No one plans for the future. Very few of us are building wealth. We don't respect hard work, but we spend our paychecks on a glamorous lifestyle, which is worshipped above everything. Our TV is a reflection of this. Our's is a culture of spend, spend, spend.

Where to begin?

Let's start with that comment about people not respecting hard work and living glamorously.

I have a cousin. He's 55 years old now. He's been a pipefitter his entire adult life. He's been known to work jobs that required him to work 12 hours a day, 7 days a week, until completion---in whatever weather conditions prevailed. He lives in a small house out in Inola. He doesn't drive a Mercedes. He doesn't own a computer. He's never been to Europe. He doesn't own a big-screen TV.

So this guy has been held back because of his "glamorous lifestyle" and because he's lazy and doesn't "respect hard work?"

Feel free to stick your finger in my cousin's face and make those allegations, Mr. Shaw. But, if you choose to do so, don't expect to get the finger back.

Mr. Shaw ended his piece with these words:

We can change. It's time to start building real wealth. Start by being thrifty.

Oh and by the way, there is no "magic" in markets. Real wealth is gained by being smart and creating and building and investing wisely over the long term.

Again, I agree with the basic premise. But there is a problem in America these days. The only place most people can go to get money is a job. And many jobs don't pay people enough money to live on let alone enough to save and invest.

I live about as cheaply as a guy can live these days. My residence is a one-bedroom apartment. I have no big-screen TV. For that matter, I have no cable TV. I have no cell phone. I have Internet access, obviously, but I don't pay for it. That runs through my brother-in-law's business, so I get it for free. I drive an old car so I have no car payment. I'm another example of Mr. Shaw's "glamorous lifestyle."

Let's run some numbers.

The federal minimum wage was recently raised to $6.55 an hour. Even if one is getting 40 hours a week on such a job, the pay comes to $13,624 annually. Let's take some liberty, assume I'm making such a wage and see how well I'm doing.

Income taxes aren't a problem for me, in my scenario. But I'm exposed to a lot of taxation---a lot. For example, though I don't pay city utilities and property taxes directly, they hit me. Whenever I go to the store for groceries, I get taxed. Whenever I go to the gas pump, I get taxed. But let's limit the tax discussion to payroll taxes, which come to 7.65 percent of my gross. Already, I'm down to $12,582.

Out of that, I must feed my landlord. I pay $473 a month. That's about as cheap as it gets, lest one move into one of those neighborhoods where steel bars are on the windows. So my landlord gets $5,676 of my net pay.

My nothing-but-an-old-landline telephone costs me about $31 a month. There goes another $372.

PSO says my average monthly electric usage comes to $68 a month. There goes another $816.

Added up, the 3 things mentioned above cost me $6,864 per year. That is 55 percent of my net pay. I'm left with $5,718 to pay for every other expense in my life for the year.

That comes to $476 per month in disposable income, on average. That might be enough for food and the gasoline it takes to get me back and forth to work.

So how do I afford to pay for the sticker on my car---that the government says I have to buy? How do I afford car insurance---that the government says I have to carry? How do I pay for any repairs my old car might need? How do I clothe myself? How do I pay for dentistry? How do I pay for the health insurance my employer graciously offers but requires me to eat half the premiums to get? How do I afford Christmas presents?

If my job doesn't pay me enough to live on, Mr. Shaw, from where does the money for saving and investing come?

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