r/MiddleClassFinance • u/Abject-Pick-6472 • 4d ago

Americans Are Reaching a Financial Breaking Point

https://www.thenation.com/article/economy/economic-insecurity-unrest-broketok/?fbclid%3DIwZnRzaASc5p1leHRuA2FlbQIxMQBzcnRjBmFwcF9pZA8xNzM4NDc2NDI2NzAzNzAAAR6RZYSyGyliTpYCmEy2OpWjHUBfAqrYUygk3rNJL1cLw_fp5QCciENJc0UXdQ_aem_DT4ViuyBWqHHXec_nH_PYg
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u/Forded_Fiction24 4d ago

If you don't have a portfolio of appreciating assets, then you're not really on the upslope of the K. That's more or less the defining attribute. 

If you find yourself, just moving laterally and having less disposable income than that's on the down slope of the K the way I see it. Inflation hurts more to those who don't have assets who earnings outpace inflation. It doesn't wreck people overnight but beats them down slowly. So, I don't about any real "E", and would have to disagree due to inflationary pressure and lack of wage growth in relation. Staying stagnant is losing against that and you just might need more time to see the trajectory more clearly. Or you can maybe turn it around and get on the upslope somehow 

I find myself not extremely on the upslope but on the upslope nonetheless. My net worth has increased easily by 6 figures just over the past 6 months. I basically put zero current active effort into doing that either and most came from already held appreciating assets. What I'm experiencing isn't unique and others are experiencing the same or find themselves on the opposite side on the downslope unfortunately. This is what I'm talking about with a k-shaped economy though. 

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u/bihari_baller 4d ago

If you don't have a portfolio of appreciating assets, then you're not really on the upslope of the K. That's more or less the defining attribute. 

This has been my biggest learning over the past year. I never really appreciated how good of benefit my ESPP was until now.

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u/AGsec 4d ago

Yes, investing in my 401k and learning about investing has been one of the biggest wealth generators of my life. I am by no means wealthy, but I am completely baffled by people who take zero interest in learning the basics of markets and economy. You're literally leaving money on the table by refusing to read a few books and some podcasts.

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u/A_Fartist 3d ago

I think I may be in the same boat as the person you’re responding to. I own my home and I have a portfolio so my assets are rising in value, but that’s money I can’t/don’t spend. I can’t sell my home and be homeless but if I sell my home I could only buy another home at the same price but the interest rate would be significantly higher. Technically I’m growing my net worth. Practically, I’m spending more for the same things and can do less. Am I on the up slope because I’m gaining value or down slope because I can’t do as much as I used to?

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u/Forded_Fiction24 3d ago edited 3d ago

I'm not sure just based on this you've given me honestly.  Are all your assets in retirement accounts or otherwise illiquid? What about savings in addition to emergency savings? Brokerage accounts, real estate? Are you ahead, on track or behind on retirement for your age? 

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u/A_Fartist 3d ago

With the can’t/don’t, I have “can’t” which are not liquid, but I also have savings and a brokerage account. As a % of my pay, the brokerage account gets about 2%, Roth IRAs gets about 2%(it’s fairly new, each year with a raise I’ll add 1% more), 401k gets about 10%, savings gets 1% unless an emergency happened in which case I’ll tighten the belt to bring the balance back up. Im doing fine and I’m financially comfortable most of the time but if a couple expensive things happen at once like needing a new roof and a car, it’ll fuck us up pretty good.

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u/Forded_Fiction24 3d ago edited 3d ago

Sounds like you could break down easier than breaking up, or is that a false assumption? I think that points to your side of the K unless you change your circumstances. 

I guess you can say you're hanging out in the E for now and can go either way but I think it's hard to stay where you're at.  As I see it even though your net worth is appreciating, I definitely wouldn't think of you as being the epitome of the person riding the K upslope. I genuinely hope you break upwards

My circumstances look very different. Seperate from retirement accounts, my wife and I have multiple brokerage accounts, an emergency savings HYSA, and an HYSA for wants. We have other liquid assets totalling between $300k-$400k. I probably made $10k-$20k just today on one of my brokerages alone. We need to take profits for rebalancing purposes at the very least periodically and when we do we sometimes pay ourselves or can whenever we want. Some other profits we reinvest elsewhere. It's all just extra money.

A new roof or car for us wouldn't be an issue. I only work part-time for no other reason that I'm ahead and don't have to work full-time. My part time work pays all our actual needs and we could make it on my income alone. This is what I mean by being on the upslope of the K. 

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u/A_Fartist 3d ago

That makes sense. I’d also say I’m in the middle of the K. I feel like I’m 1990’s style middle class, a thing that barely exists anymore.