The Economy You Feel, Not the One You’re Told About Part 4

[Luis Gonzalez]

The Economy You Feel, Not the One You’re Told About
A Five-Part Special Series From The Last Wire.

Part Four: How Household Adaptations Reshape Markets, Institutions, and Policy

Part Three explained how households adjust their spending, borrowing, and life choices when wages lag behind rising essential costs. These adaptations preserved day-to-day stability but reduced flexibility, risk tolerance, and long-term mobility. Part Four explores how those household decisions feed back into the broader economy, reshaping market demand, institutional behavior, and policy responses, creating reinforcing feedback loops that make affordability an ongoing structural challenge.

"Household behavior is not isolated; it sets the rhythm for the broader economy."

Continue reading at The Last Wire.

[Cyber Liberty]

A great series by an inspired writer!  I encourage all Briefers to read all the parts as they are completed!

[DefiantMassRINO]

After 2008, I looked at my household finances like my employer looked at their fiscal health.

I identified positive value propositions, negative value propositions, and focused on free cash flow.

My parents were asset rich, mostly home equity, but cash poor.

I wanted to reduce the monthly run rate / minimum monthly obligations to improve monthly free cash flow.

I choose to live below my means because I am one layoff from living in a van down by the river.

Like rivers, income streams can dry up unexpectedly or without warning.

The greatest impediments of positive monthly cash flow are taxes, mortgage/debt, insurance, and utilities.

Not much I can do about taxes other than move.  Not in the cards, yet.

Can shop around for insurance and save with bundling home, auto, recreational and getting group rates from AAA or AARP.

Utilities is a matter of denominating electricity by killowatt hours used, heating oil by gallons used, and water by gallons used.  The dollar amount charged is out of my control, but the number of units I consume is within my control.

In 2013, when Solar City came knocking at my door with the offer a leaseback solar system (no money out of pocket), I took them up on that offer.  It made sense in my situation since Mass/New England was shuttering coal, nuclear, and gas generation facilities with the anticipation that lost generation capacity would be offset by wind, solar, and Candian hydro - all limousine liberal uptopian day dreams.  Since 2013, we've had more trees cut down and our solar ouput has increased to offset grid consumption (net metering).

Debt avoidance can maintain free cash flow.  Debt reduction can increase free cash flow.  I carry over credit card balances for three months or less, mostly paying off the monthly balance in full. 

Amoritarized loans are structured that the front-end payments are mostly interest, not principal.  This is when paying extra towards the balance can offer the greatest return on investment.  You may think that paying an extra $20/month towards a mortgage won't make a big difference, but that $20 is against principal.  The compounded mortgage interest avoidance/reduction/savings is exponentially increased by the number of remaining payments.  Especially at the front-end of the loan, any amount of extra principal paid will return substantial non-taxable dividends of interest payment reductions.

When I could reduce my monthly mortgage payment by $250+ month, I refinanced for the lower monthly payment, which improved my monthly free cash flow.   That was an extra $250 I could bank or use to pay down more mortgage principal.

Reducing expenses is more tax efficient than earning more income.  I don't get taxed for every dollar I don't spend.  I do get taxed for every dollar I earn.  For every dollar I earn, I bring home $0.60 after payroll deductions.  I have to earn $1.60 to bring home $1.00.  Every dollar I don't spend offers a 100% return.  Every dollar I pay towards principal, offers 100%+ compounded return on investment.

To keep my household afloat, I have to run it as a business without having the benefit of being able to deduct operating costs, such as utilities, food, insurance, etc.

I spend less, I investment more (tax free debt reduction), and I save more.

Now that I am over 50, I can make extra contributions to my employer 401K to reduce my payroll tax liability.

Tax avoidance and debt interest avoidance can offer higher % return on investment because they do not get taxed, unlike earnings, dividends, capital gains, etc.

[Luis Gonzalez]

After 2008, I looked at my household finances like my employer looked at their fiscal health.

I identified positive value propositions, negative value propositions, and focused on free cash flow.

My parents were asset rich, mostly home equity, but cash poor.

I wanted to reduce the monthly run rate / minimum monthly obligations to improve monthly free cash flow.

I choose to live below my means because I am one layoff from living in a van down by the river.

Like rivers, income streams can dry up unexpectedly or without warning.

The greatest impediments of positive monthly cash flow are taxes, mortgage/debt, insurance, and utilities.

Not much I can do about taxes other than move.  Not in the cards, yet.

Can shop around for insurance and save with bundling home, auto, recreational and getting group rates from AAA or AARP.

Utilities is a matter of denominating electricity by killowatt hours used, heating oil by gallons used, and water by gallons used.  The dollar amount charged is out of my control, but the number of units I consume is within my control.

In 2013, when Solar City came knocking at my door with the offer a leaseback solar system (no money out of pocket), I took them up on that offer.  It made sense in my situation since Mass/New England was shuttering coal, nuclear, and gas generation facilities with the anticipation that lost generation capacity would be offset by wind, solar, and Candian hydro - all limousine liberal uptopian day dreams.  Since 2013, we've had more trees cut down and our solar ouput has increased to offset grid consumption (net metering).

Debt avoidance can maintain free cash flow.  Debt reduction can increase free cash flow.  I carry over credit card balances for three months or less, mostly paying off the monthly balance in full. 

Amoritarized loans are structured that the front-end payments are mostly interest, not principal.  This is when paying extra towards the balance can offer the greatest return on investment.  You may think that paying an extra $20/month towards a mortgage won't make a big difference, but that $20 is against principal.  The compounded mortgage interest avoidance/reduction/savings is exponentially increased by the number of remaining payments.  Especially at the front-end of the loan, any amount of extra principal paid will return substantial non-taxable dividends of interest payment reductions.

When I could reduce my monthly mortgage payment by $250+ month, I refinanced for the lower monthly payment, which improved my monthly free cash flow.   That was an extra $250 I could bank or use to pay down more mortgage principal.

Reducing expenses is more tax efficient than earning more income.  I don't get taxed for every dollar I don't spend.  I do get taxed for every dollar I earn.  For every dollar I earn, I bring home $0.60 after payroll deductions.  I have to earn $1.60 to bring home $1.00.  Every dollar I don't spend offers a 100% return.  Every dollar I pay towards principal, offers 100%+ compounded return on investment.

To keep my household afloat, I have to run it as a business without having the benefit of being able to deduct operating costs, such as utilities, food, insurance, etc.

I spend less, I investment more (tax free debt reduction), and I save more.

Now that I am over 50, I can make extra contributions to my employer 401K to reduce my payroll tax liability.

Tax avoidance and debt interest avoidance can offer higher % return on investment because they do not get taxed, unlike earnings, dividends, capital gains, etc.

Great post.

[Cyber Liberty]

Great post.

I agree!  This is the kind of kitchen-table analysis we need to see in this country!  Kudos @DefiantMassRINO!

[Luis Gonzalez]

Tax avoidance and debt interest avoidance can offer higher % return on investment because they do not get taxed, unlike earnings, dividends, capital gains, etc.

The 20% devaluation of the dollar during 2021-2022 via borrowing drove tons of people into increasing CC debt.

One of the many things we have to thank Biden for.

[Free Vulcan]

There is great variability within the aggregate nation economy. Perfect example was the 70's, where the East coast in particular was struggling, the Midwest was booming with all the farm income, which reversed in the 80's Rust Belt.

Here in Iowa we pay far less for ag products like eggs and meat v. the coasts. It's much cheaper to live here overall.

[Bigun]

Great post.

I could write a book in response to this one post!

[Bigun]

The 20% devaluation of the dollar during 2021-2022 via borrowing drove tons of people into increasing CC debt.

One of the many things we have to thank Biden for.

That was no accident! See Cloward-Piven.

[libertybele]

That was no accident! See Cloward-Piven.

Nothing that the Biden administration and his cronies did was an accident.

[Luis Gonzalez]

All.

I'm trying to be a kitchen table Charlie Kirk. Obviously not Charlie per se, but I am trying to get information out to people (us here), bullets to counter the left's new "affordability crisis"; one created by them.

I hope I can reach one person who may find one thing they didn't think about/know to carry on debates against the BS campaign the Democrats are running with.

They think the people are stupid, and I pray that they're not.

[Luis Gonzalez]

That was no accident! See Cloward-Piven.

Write the article Bigun!

[libertybele]

All.

I'm trying to be a kitchen table Charlie Kirk. Obviously not Charlie per se, but I am trying to get information out to people (us here), bullets to counter the left's new "affordability crisis"; one created by them.

I hope I can reach one person who may find one thing they didn't think about/know to carry on debates against the BS campaign the Democrats are running with.

They think the people are stupid, and I pray that they're not.

Well unfortunately, there are may LIV -- hopefully you've reached a couple. 

It is also unfortunate that there are so many youth that have been indoctrinated by our liberal school system - that is what needs to change -- Charlie was working on that and Glenn Beck I know is trying to enlighten them as well. 

Maybe the 'Last Wire' needs to be disseminated on our campuses. 

[Luis Gonzalez]

Well unfortunately, there are may LIV -- hopefully you've reached a couple. 

It is also unfortunate that there are so many youth that have been indoctrinated by our liberal school system - that is what needs to change -- Charlie was working on that and Glenn Beck I know is trying to enlighten them as well. 

Maybe the 'Last Wire' needs to be disseminated on our campuses.

Thanks!

I spent over forty years working in and around proteins, supplies and groceries selling to food and liquor establishments, hotels, country clubs, etc. so that’s my basis of understanding , plus an absolute love of money.

Don’t judge. 🤣

Spent the last 24 hours in ER over what turned out to be acid reflux, so I dug into grocery prices and THAT ladder. I’m hoping to get that out maybe Saturday. At the very onset of the pandemic, I did a training class for the company’s sales reps on how to handle everything that I thought we thought was going to happen.

We were so wrong.

Within months of that class I (along with many others) got laid off, and the 100 year-old independent distributor that we had taken from a $100M/year one warehouse local business, to a four-distribution-center, $2.3B/year in sales was sold to a national distributor.

I’ve spent a ton of time reading about the whole industry since then.

[Bigun]

Write the article Bigun!

Already done @Luis Gonzalez


The Cloward‑Piven Playbook: Crisis‑Driven Change


https://en.wikipedia.org/wiki/Cloward%E2%80%93Piven_strategy