Why do Americans pretend they're not broke when most Americans are in debt?

Do we count mortgages as debt here?

Americans are big on appearances. Gotta seem religious. Gotta seem rich. Gotta seem happy. Gotta seem free.

Seem

crazy how people in brazil used to look up to American living standards, but it turns out americans have more inequality, violence, worse education, health system, worse food, and the list goes on

The US is big on wealth inequality, like most third-world countries. Yeah, lots of people are broke, but lots of people are also making 200k/year. Overall we're definitely struggling, but that doesn't mean everyone is struggling.

Lemmy also leans both older and into the tech demographic, which tend to be higher paid.

Cries in near minimum wage UK tech work. The only upside is minimum wage is actually pretty good

Who's pretending?

We're all broke. Unless you're a boomer trying to sell a $0.50 house you bought in the 50s you paid for on a gas station cashier salary. They're ok for the moment. But even a lot of them are going broke now too. Highest demographic of newly homeless last I heard.

It’s part of our culture. It dates back to when America was new. Plantation owners wanted to pretend we had a rich and powerful economy and history and culture. They made everything pristine and gaudy and exp wove looking but there was no substance. Look at the architectural decisions made in plantation houses and how the elements are still used in homes today.

We pretend we are better than we really are.

I'm guessing not admitting your finances are shit is pretty universal, no need to pick on 'Murica.

There is some truth to what you're saying but the USA are special about it. It's like, tbey try to (badly).act as if they had more than enough money but it's obvious they're struggling badly. Like a functional addict thinking he's hiding it but everyone knows and there's a shared social discomfort in the charade

In debt doesn’t mean broke. People with a mortgage that they are easily paying off have debt. Millionaires and billionaires have millions and billions in debt. Debt itself isn’t bad. Debt can be good.

I would rather no debt, but I kinda need a house because it's illegal to buy a field and live there in a yurt
The average American is living paycheck to paycheck with bad, high interest debt and killer monthly minimums. Many people roll their underwater car loan into a new underwater car loan. The housing market is taking a turn.
People are mostly broke.
- Based on statistical average, or based on your imagination?
  I get that we say this culturally, and it's common. But it's not that simple.
- The point is that being in debt isn’t the same as being broke and living paycheque to paycheque. Rich people have note debt than broke people because banks etc are far more willing to give rich people debt since they can actually pay it back.
Just a small correction there: debt can never be good.
But debt can be necessary, but that is only because some financial institutions have made it so, because many of them make their money from peoples debt.
So they spread the myth that debt is good, despite the fact that the world would be a far better place without debt.
- No, debt can be good. If you’re making more money from an asset than the interest on the loan used to buy that asset, it’s good debt.

Broke, poor, and in debt are three different things.

Broke just means no cash on hand. You can have tons of cash flow and assets but at the moment you are lacking liquidity to pay cash for things. You may or may not have debt. You might have just blown all your cash on a big purchase.

Poor means you have little and earn little and can do little. Debt is often a factor here but you can be poor and not in debt.

People in debt owe money. They might not be struggling at all. Sometimes rich people borrow money because it costs them less than the interest they receive on the cash they have. Or it could be the opposite, it could be crippling every aspect of their lives.

Americans carry a lot of debt on average. My only debit is my mortgage plus the last two weeks of credit card spending. I pay off my card in full every month. I only use the credit card because it offers purchase protection and I get rewards. Not all debt is bad debt, but a lot of it is.

Because we want to spend our end of days in comfort

While I have no debts, sometimes my bank account is hovering at a $200. I hate the insecurity it gives me.

That's called Modern Monetary Theory. It's a fun game until the underlying physics of our little civilizational project fails, that is to say the energy return on pumping oil out of the ground.

who's pretending they aren't broke?

Many US-americans.

Stupidity and the art of flexing.

I know that I'm broke and I'll be working until I either go senile or die. It took me too long to start figuring things out.

And that you were never taught better was intentional.

Debt, used properly, makes you wealthy. Every billionaire you know has debt because of the advantages.

I grew up middle class. To afford my prestigeous university, I took out debt (before grant only financial aid). The value of my education allowed me to earn a higher salary to pay it off in two years. I kept earning that salary and more after the debt was paid. It had a high present value.

I bought my latest house four years ago. Mortgage rates were so low I decided to finance part of it at 2% even though I had the cash. I now earn 4.5% in money markets. After taxes, I earn 0.72% every year not to pay off my mortgage. With $350,000 remaining, this is an extra $2,500/year right now.

I shop with credit cards that give me 2-5% back on purchases. I pay off my balance every month and have never paid one penny in interest or penalties in over a decade. My credit cards therefore pay ~$1,500/year tax free.

Larry Ellison likes controlling Oracle and being a billionaire. Rather than selling stock of Oracle to fund his lifestyle, he instead borrows against the value of the stock. As Oracle appreciated, he got to keep the gains he doesn't trigger capital gains taxes.

Most Americans do live paycheck to paycheck. They live at the ragged edge of their means and remain ignorant of finance. However, this is a global phenomenon. The difference is that much of the United States tax code is set up to benefit the wealthy. Adopt their habits and your wealth starts to snowball.

I shop with credit cards that give me 2-5% back on purchases. I pay off my balance every month and have never paid one penny in interest or penalties in over a decade. My credit cards therefore pay ~$1,500/year tax free.
I don't really have anything to add as this is pretty much all spot on to how the wealthy live, but on this one I'd like to point out that you're not actually making money - you're just taking back part of the money that you already paid. That money isn't paid by the credit card companies, they'd never be dumb enough to leave money on the table like that. They pay it through increased transaction fees for the businesses, who eat the extra cost through higher prices. There are states that do something similar with their recycling programs. They give you 5 cents per bottle you recycle at the center, but you paid a 5 cent bottle deposit when you bought them at the store. You're not making any money, or even making back some of what you paid the store. You're just getting your deposit back.
Maybe you somehow reduce your taxes by cycling that money through a cash back program? I'm not well versed on finances, so I won't even try to theorize on that, but it certainly isn't free money or something.
- Yes, the credit card spending is technically a rebate, hence why it is tax free. However, I am going to purchase an identical basket of goods and services whether or not I use credit, so it is functionally identical.
Larry Ellison likes controlling Oracle and being a billionaire. Rather than selling stock of Oracle to fund his lifestyle, he instead borrows against the value of the stock. As Oracle appreciated, he got to keep the gains he doesn't trigger capital gains taxes.
I never really understood this. He still has to pay the loan, and he isn’t doing that with his symbolic $1/year salary. What part am I missing?
- As I understand it, one way is to just borrow again against similar stock. He borrows against stock bundle A for a while, and when that loan comes due, repays with a fresh loan against stock bundle B. A and B can be the same amount of stock, but as long as the line goes up, the loan against B more than repays the loan against stock A.
  There's intricacies and details in the process, but that's how I understand the basic process goes.
- Debt interest below investment yield means infinite money.
  You're missing the taxes they aren't paying on the yield of the investment. That's only taxed when sold. So if you borrow against investments tied up in the market then it never triggers the tax.
  Theoretically their estate would get taxed on the value resulting in a nice cascade of tax triggers but they're doing away with that asap.

What's important is how much you can buy, not how much money you have.

I don't know anyone pretending they aren't broke in America...I know a lot of good people struggling paycheck to paycheck and that's it. I love how Lemmy has become this echo chamber of hate for Americans when y'all are just as fucked in Europe and other countries too with so many similar or different issues. Imagine a little compassion for all people rather than assuming "America bad because America". Just so incredibly sad and stupid to see how dumb so many people are.. that kind of thought process is exactly the same type of people that vote for trump that have this same attitude about "insert race or country here". Y'all need a reality check, yesterday...

Speaking of "paycheck to paycheck":
I certainly have compassion for people who live paycheck to paycheck because they're struggling to make ends meet, but not those living "paycheck to paycheck" who have the ability to save, but choose not to. And, despite popular belief, the majority of people in the "living paycheck to paycheck" category are actually the latter. But it's easy to assume the former meaning (it's more intuitive, after all), so "living paycheck to paycheck" is ambiguously used to great effect in rhetoric.
The fact is, on average, Americans have more of an overspending problem, than an underearning one. Did you know that 48% of consumers earning over $100,000 a year, and over a third earning over $200,000 are "living paycheck to paycheck"? Meanwhile, I was putting away over $1000 every month before I was making $50k/year.
I'm American
when y’all are just as fucked in Europe
I'm sorry, is this some joke I'm too publicly health insured and 6 weeks of paid holidays by law and so on to understand?
- Are you pretending that no one is broke in countries that have mandatory paid leave and “free” public health systems? As someone who lives in one of those countries myself I can, with 100% certainty, say you’re incredibly wrong.
In previous centuries with colonialism Europe was the cause of much disgrace in the world.
After WWII with neo colonialism it was either us or ussr imposing their way of life and values over the media, but overly exploiting resources and weakening both local economy and healthy politicians and putting dictators everywhere.
us bad fame still didn't catch up with all the bad stuff they did and are still doing.

I've dealt with people that made it to adulthood not really understanding that if they have cash in their pocket, but more debt than that, they don't really have money available to spend on frivolous things. Some of them are my friends.

They will be "broke" 5 days of the week, but spend freely from when then cash their paycheck (or get that next payday loan!) until all they have is change.

But, I've been lucky. I got a degree without taking on debt AND the worst CC hole I had to dig myself out of was not even to the limit of one card. I think most people have to ignore student or medical or other debt just to function...

Being in debt isn't synonymous with being broke.

I could pay off my house tomorrow if I wanted, but financially it doesn’t make sense - so I keep the debt. That doesn’t mean my net worth is negative or that I don’t have disposable income.

I wish I had learned this nuance earlier. I started out throwing all the money I could at whatever I was trying to pay off as fast as possible because I had it hammered into me as a child that all debt is a personal moral failing.
I've since learned that having cash on hand and a relatively low interest loan like a mortgage or a car loan, is better than a slightly lower balance on said loan and having to use a high interest credit card when an emergency inevitably pops up because I didn't have any cash.
Sorry, I'm dense. For me being in debt and paying off something like a loan on a house has the purpose of paying something you do not have the funds for to pay off in one go. Seeing as the longer you take paying it off, the more you actually pay since rates increase or whatever, depends on contract specififcs.
How is it not a smart thing for you? Is this about US credit rating system or something else.
Edit: thanks to all replies, not gonna spam thank yous to you all. Didn't consider those options.
- My savings are invested in the stock market, and the returns I get from that are higher than the interest on my mortgage. If I liquidated my investments to pay off the house, the savings from not paying mortgage interest would still be less than what I’d make from the market over the same period. I’d rather use the profits from my investments to cover the mortgage interest - that way I still have money left over. If I did the opposite, I’d lose that extra money.
- Besides what others have said, there is a mortgage interest deduction on taxes in the US. It’s basically the government saying “we want you to buy a house, so for the interest you pay on a home loan, you don’t have to pay taxes on it.” So combine that with a low rate, and it absolutely makes sense to have that debt and put the money to work elsewhere.
- I have enough to pay off my house right now but I'm not because the interest rate is both lower than inflation and what I earn from interest, and other invesents, plus the increase in home values. If I paid off the house today then I also wouldn't have as much in my emergency fund. I have 5 years left of the mortgage, I'm paying roughly $50/mo interest which goes down every month.
- I'm not who you are responding to, but I'm in the same position.
  Interest rate on house mortgage is around 2%, currently looking to invest in an apartment in Europe. The current rates are ~4% here, so it makes more sense to keep the cheap money from the house mortgage than to trade it for more expensive money.

Debt is not a broke person thing. Most people you'd consider to be well off have debt.

Americans dont feel broke because they have extremely strong purchasing power.

We have a very materialistic and consumeristic culture and we shame the poor.

Or more specifically, we are ashamed when we can't afford things we need. We are saturated by right-wing propaganda that says if you don't succeed, it's your fault. So, like abuse victims, we internalize the shame of what is done to us.
It's a message tailored so we don't question the rich, and as an added benefit to them, trains the poor to not seek government systemic solutions to the inequality that creates their poverty.
Homeless people are more financially rich than most of this country.
Do you see the problem yet
It's actually curious to read this comment while several others state how they could manage to pay their debt, but they choose to be in debt because it's somehow convenient for them. I believe them, it's just curious because anyone could say the same.
- Part of that has to do with how our economy is built around credit cards and debt itself. They don't want you to fully pay off your credit card debt, and will reduce the amount you can borrow if you do. And if you try to opt out of the debt system entirely, it hurts you as well because you have no credit score from the credit card companies and no history of paying off you debt on time, which hurts your chances to get things like loans and mortgages. I hate debt, and ran into this issue the first time I went to buy a car because I had always used debit cards to buy stuff. Despite the cards being Visa cards that just got paid off immediately by charging my bank account instead of being paid off over time, I didn't have any debt history as a result and had to have somebody cosign my car loan to vouch for me that I'd actually pay the loan.
- are you talking about the comment mentioning it makes financial sense to not pay off their mortgage?

How else are we supposed to know who's better than who?

https://youtu.be/vudnMLzZjTg
I thought you guys used race and gender for that?
- Oh that too. We make sure to remind the poor white folk they are still better than rich black people
With a star on your belly.
The Jones's are a bunch of chatty kathy pricks.
- Yeah, but they have a hot tub.

If a person has a house they are paying a monthly mortgage payment towards, no one in America would consider them "broke".

I was in debt for several years from college tuition, but would not have been considered "broke" because I managed a job that met my essentials plus enough to pay down my tuition loans.

Debt isn't seen as bad so long as it's being managed. Exceptions for Dave Ramsey fan types.

You could say college and housing and medical stuff should never out a person into debt and I would agree. But that wasn't the question, it was about general perspective in the US.

Yeah. Being broke is a problem with cash flow, not the balance sheet.

I mean, it depends on what you mean by that. Anyone who has a credit card is going to have debt, just by virtue of needing to pay the bill.

But if you mean "most Americans have a negative net worth" --- taking into account assets and debts --- most Americans have a positive net worth.

https://www.kiplinger.com/retirement/average-net-worth-by-age-how-do-you-measure-up

The median net worth of all Americans in 2022 was $192,900.

Oops, dad got sick, time to sell the house
- You have a house?
Yeah, but if you were younger than 35 in 2022, your net worth was 39,000 USD. It was already brutal, since society expects people to own, or at least rent, homes in their twenties. Now, I haven't heard about things shaping up for younger people (quite the contrary), Trump's dollars are less biggy and the clocking bomb in the form of inflation, they all paint a gloomy picture.
TIL that for my age bracket, apparently I suck.
$192,900
How much of an average little house is that?
- About ⅖
Credit cards don't have to mean debt if you pay them off before the intrest applies. That's how you use them responsibly. Many don't.
- It's debt regardless of whether or not one pays interest. Debt isn't linked to interest. Just means that you have an obligation to pay money to someone.
  EDIT: Though in fairness, if one never actually uses a credit card at all, then one never takes out debt, so I suppose it's probably better to say "if one has a credit card that one uses".
  EDIT2: Though all this is not to diminish your point that not carrying credit card debt from month to month is generally a pretty good rule to live by.
I'd be interested to see the median net worth after removing the top 1%, but I can't be bothered to Google it atm ..
- It'd have an effect, but not a large one --- that's why one uses median, rather than mean.

I blame that predestination bullshit that's in the country's DNA. If you're rich it must mean God loves you and if you're poor that's due to your sins.

Puritanism meets prosperity gospel. The original Jesus would get crucified all over again if he set foot in this hellhole.
Not enough people talk about this. This attitude is rampant in the Republican party and no one says a word about it Not even Republicans

I am absolutely beyond broke on paper. My debts are well into the six figures and my bank account is in the low five figures.

I'm in my 40s and have a whopping $15k for retirement and no assets.

It's pretty awesome.

I had $17k in the 401k when I was laid off from my last job - it had been twice that but there was that big collapse. Raised a lot of kids and couldn't put much away. Always something but never much. That was in my 40s.
I am dug out now, mostly, in my 50s, not to the point I think I'll retire but oh my God when I look at the difference between them and now it's crazy, there is so much more.
I just want to say, don't give up hope. I would never have dreamed that this would turn around and it did. And the kids grew up too.
- Oh, sorry, I haven't given up hope. It was sort of said with...a laugh. I do have some investments I've made as of late that are looking like they could pay off big...we'll see. Either way, I still sleep okay at night and I have a roof over my head so I can't complain.
- Raised a lot of kids and couldn't put much away.
  And this is why people are not having kids.
  If you are normie. It should be really just 1 if you got to breed and any extra depends on financial ability
I've been there. It sucks. But it was possible for me to get out. It took years. Be careful, and be ready to catch any luck that might come your way.
- That's all we can do here. Sadly only some of us will be able tobreak out.
  But if everyone did their best, it would deny owners so. i profit at least.

It's just temporary trust me.
Tonight is the night, I'm going to sleep and have 🗽the American Dream ™️ 🦅

I think most americans identify with the book cover, and not the book.

Honestly, not being a dick and caveat for me not knowing shit about you, but if you are curious enough about the topic to ask, you should take a quick finance course. Not like enroll in college or anything. I wanna say there are tons and tons of free to access resources for learning how debt and assets work that will undoubtedly improve how you manage your own money.

Just to save the search (I use Udemy the most but definitely have not checked out all of these platforms personally, so do yo own due diligence lol)

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Fuck it, lol, here is a link to a list of 30 free financial courses for all types of financing.

No idea who down voted you but holy shit, some people om here resent the idea of having to educate themselves.
Hopefully threat actors but JFC
Do we have a personal finance community on fedi?!
I am sure there is enough middle age cucks here to provide proper info for specific questions.
- Let's mention some of them
  !personalfinance@lemmy.ml
  !fire@lemmy.ml
  !personalfinance_us@lemmy.world

Maybe the real curency was the debt we found along the way?

Cash liquidity =/= standard of living

A lot of people are in debt on things like cars and homes, that’s where a lot of the debt is. There is also credit card debt, but that’s a whole other thing. So long as people can make the payments on the loans, and those payments grow slower than their income, they can maintain a given standard of living.

Also a lot of the super rich make most of their money off of collateralized assets as a sort of tax dodge. Them being largely payed in assets that appreciate in value, they then take loans out against the value of the asset, and so long as the asset appreciates in value faster than the interest rate, they’re fine. Since the assets aren’t taxed until they are sold (unrealized gains) and they’re technically not selling the assets by using them as collateral against a loan, so they’re not taxed on that income. This situation also skews the numbers on “the average debt of Americans”.

Ultimately though, this is all a super fragile situation, and all it takes is for assets (like say a house or stock in a big tech company) to decrease in value for everything to explode.

There are also a lot of Americans who are not in such a situation and are limping along financially, trading debt for time, and live at a much lower standard of living.

Generally correct however if you are paid for work in stock, that's ordinary income on the vest date. You have to pay tax either be selling or out of pocket.
The story you are going after us when shareholder has a stock that appreciated greatly, then they will do the loan secured by stock to avoid recognising income until the time is more favourable or stock appreciated enough to lay the loan and you sell a part to cover the debt. And do it again if you think stock will keep growing.

Some of us are just trying to make the most of whatever time we have left.

If you own a house or vehicle in the USA there's a good chance you're in debt.

Kinda answered your own question there

Hey, it's the land of Hollywood. If anyone in the world is good in pretending, it's them.

I mean honestly some should not be. There is this guy that talks about california real estate on over ten million dollar properties were the person has problems with other debt to. I mean the down payment has to be a mill or more. If I had financial means like that I would be debt free.

There is deff high income people who suck at budgetting. But fast majority of pay to pay check crowd are objectively poor.
60% of americans live pay check to pay check. I would say like 10% of them people who can't manage money.
- No part of my education included basic personal finances. My son is now in high school and also reports the same.
Unfortunately financial responsibility is not taught in school. Hell finance isn't even taught unless you're going to business school and that doesn't even necessarily cover skills like budgeting.

I owe nothing!

Who's pretending? Not here! We know we broke

Shame. Like several other cultures, Americans are very judgmental of poor people.

American hate of the poor is rooted in English roots where they have special disgust for them.

I mean, yeah, I have a mortgage that will outlive me, but I still have money coming in.

I believe it's partially because the national debt has always been high and keeps getting higher. It's been a little while since I checked or heard anything about it, but it got a lot of press time in the 2010's. I feel like that affected how americans view debt. I've also heard the financial advice espoused by banks "it's financially healthy to have some debt, it helps you build credit". Which is partially a crock of shit and regardless of the veracity of that statement, it mostly leads to people digging a hole they can't get out of.

spendy culture in general is disconnected from reality

Who said I pretend? I'm effectively broke, between side jobs anyways. But hey, at least I earned a little extra cash doing some bicycle maintenance and other random help for a neighbor today.

MSMs propaganda, decades of it, so you wont realize that you are "actually poor" because of the top .05% owners. im simplifying, buts its through various mechanisms, like advertisements, news, politicians.

In a country where personal identity is 90% shaped by politics and consumerism makes seeming poor like herpes.

Normies just reacting to their environment

The thing about it... Anyone can pretend to be rich for a year or two but math will math eventually.

https://idioms.thefreedictionary.com/keep+up+appearances

Sometimes people attack weaknesses. This is a defense mechanism. Also it's better for mental health to focus on what you do have, rather than what you don't. That doesn't mean you're not trying to meet genuine needs. It just means learning what are genuine needs and addressing that, while also noting "I have food and shelter, that's a great thing!" Especially when so many don't.

Must keep up with the Jones.

Ok, not an exact answer, but... In 2008, John Oliver had a bit that I thought captured the US culture of consumerism. He basically said that many countries could invent or even build an inflatable BBQ - but only Americans would actually buy an inflatable BBQ. Anywho, spending money, independent of whether a person has it, seems to be a cultural phenomenon in the US.

Country Last Previous Unit Norway 210 206 % Luxembourg 187 182 % Netherlands 181 184 % Canada 171 173 % New Zealand 169 168 % Denmark 169 174 % Sweden 151 156 % Finland 108 112 % Cyprus 97.14 105 % Belgium 95.93 102 % France 95.35 102 % Euro Area 93.09 96.79 %
https://tradingeconomics.com/country-list/households-debt-to-income
Can't find US on there but I am know it ain't first.
Debt is the westoid material condition... The quality of life people enjoy requires it.
- Yeah, I was wondering about the US too. Also, I was expecting to see debt:income more like 30%. Am I reading this list wrong?

I hate that the concepts of broke and debt even exist. It's all made up.

Credit

Red herring arguement.
Once you hit the credit limit, you are done and now you 25% rate on the 20-50k you charged.

Most americans aren't in debt.

Most americans aren’t in debt.
American household debt is on a relentless upward trajectory. It was at a record $18.20 trillion by 2025, up $4.6 trillion since 2019. With 90% of Americans having some form of debt
https://www.debt.org/faqs/americans-in-debt/demographics/
IDK about US education and math but "most" in the rest of the world means more than 50%.
10% = not good

Classism.