The Plastic Safety Net

[powayseller]

The Reality Behind Debt in America, an October 2005 report by the Center for Responsible Lending finds that families use credit cards to cope with rising costs, stagnant incomes, and lack of safety nets such as savings, unemployment and health insurance.

Recently, RightSide stated that IRS returns show that American incomes are increasing. I would like to see the data. Perhaps the rich are getting richer, but the majority of Americans are falling behind. Real wages are down, and reliance on credit is up. Americans in the three bottom 20% of income bands, saw real wages go up only 5%, 12%, and 15% in the last 20 years, respectively.

A quarter of US households are asset poor – they lack the net worth to subsist at the poverty line for 3 months.

The survey shows 70% of low- and middle-income families use
credit cards to meet basic living expenses, such as food, rent, and gas or unexpected financial emergencies. This debunks the myth that credit cards are used to acquire luxury goods.

This survey paints a picture of a society ill equipped to handle a housing downturn or credit contraction.

[Anonymous]

PowaySeller:

Hands down the best tool I have seen is this one.

Adjusted Gross Incomes (AGI) from tax returns by zip code

http://www.melissadata.com/lookups/taxzip.asp

You only get 15 free lookups in a day, without messing with cookies or IP addresses.

There are a bunch of other lookups of interest to people with an interest of what is really going on with the RE market.

Happily my AGI is larger than average for my very coastal zip code.

Unhappily, that still means I can't afford a house here, yet.

[lindismith]

This was a great report, Powayseller.

As a business owner who does not offer health insurance to my employees, it made me realize I’m possibly being very irresponsible by not offering it to them. At the same time, for me to stay competitive in manufacturing, high(er) labor costs could put me out of business.

How do I offer my employees health insurance so they aren’t racking up credit card debt? How do we as a society get people off the emergency-credit-card-to-the-rescue cycle? How do we offer low cost health care? Since most of my employees are Spanish, I know a lot of them go over the border to the doctor, but that’s not always possible in an emergency.

Does anyone know of any health plans out there I could investigate?

On a related note, this report made me realize how people with a lot of credit card debt find ARMs attractive because they can pay off their credit card debt, and just make one low mortgage payment. The problem is if the lender preyed on their ignorance and got them into a loan that really wasn’t right for them….. and now it’s adjusting. This scenario must be fairly common.

[powayseller]

Your concern is admirable, and part of a larger social problem. Perhaps you can think of some solution, and propose it to the governor.

[Anonymous]

lindismith

Sorry, but you are out of luck. It is becoming more difficult each day to find a plan that gives you the benefits that you expect at a price that your business can absorb.

My ultimatium was to go out of business or move to Mexico.

I now employe 1000 Mexican Nationals and 30 Gringos in four packaging plants in Mexico. My insurance costs with Blue Cross PPO for the 30 Gringos costs me $27,000 per month after a 30% copay for dependents. We pay 100% for the employee and 70% of the dependent family. I will not tell you what it costs to insure the 1000 Mexican Nationals.

I know for a fact that one day I, or my successor, will have to face the fact that no one in the US can purchase my product because no one has a job.

But what can I do? With Free Trade I need to go were the production cost are lower to compete. Not everyone can be a rocket scientist. Not everyone can invent CDMA.

I will draw the line at China. I hope I am either retired or dead before I have to make that decision.

By the way the PPO we offer to the US nationals is close to best plan offered by any company in the US. It is just short of 95%

I had to have colon resection and my out of pocket was $1,400 on a total hospitalization cost of $46,000.00 done at Scrips in La Jolla.

I have no idea how GM can pay that for the number of employees covered.

[powayseller]

CFO, I’ve heard a solution is to make health insurance a true insurance, rather than a plan that pays for all expenses. It should cover only catastrophic expenses, not simple office visits and lab tests. The US spends more per person on health care than any other country in the world, but our mortality rate is higher.

The US aims to bring top quality health care to every person, but that is not feasible. Not everyone can have a Cadillac. Some people must drive an Escort. Similarly, not everyone can expect access to the best cardiac or cancer surgeons. If we redesign the system (this has been written about at length elsewhere), employers and employees will win.

I know this isn’t housing related, but the increasing poverty of the middle class which has been temporarily alleviated by the housing bubble, will become once again apparent, and it breaks my heart.

[Author]

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