Ah the struggling middle-class! Current income, credit cards or taking from savings, spending is spending and if you believe the macro data and its interpretation by politicians, none of it should be happening because the middle-class has stagnant income or actually less income.
So, how do you explain the disconnect? Human nature. Economic data do not account for the behaviors of individuals; positive or negative. It’s not inequality that gets the less equal in the most trouble, it’s life choices.
Most of us are far from being a Mr Spock. We rationalize our choices until we wake up one day and it’s too late. We are 65 and “suddenly” discover living only on Social Security was not that good of a choice … back in 2015 if we hadn’t bought the four kids new iPads we could have $52,000 in the bank without saving another penny. Oh my 📱
Not only do parents admit to overspending on their kids’ holiday gifts, they’re tapping their retirement funds to do so.
That’s according to T. Rowe Price’s 2015 Parents, Kids & Money survey, which not only found that 62 percent of parents agreed with the statement, “I spent more for my kids over the holidays than I should have,” but that 7 percent of respondents actually admitted to using their retirement accounts as holiday spending cash.
Even more tapped their emergency funds to do so, at 9 percent, although fortunately the greater majority used more conventional means. Although maybe it’s not so fortunate after all, since 47 percent used credit cards, racking up those balances.
Fifty-six percent said they used their current income to overspend on the kiddies’ sugar plum visions. Not that overspending makes them happy: 50 percent of parents who overspent on the holidays argue about money with their spouses, while just 27 percent of the parents who didn’t overspend for the holidays argued with their spouses about money.