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Monday, October 22, 2018

Why our Middle Class is Screwed

Poor Man Survival

Self Reliance tools for independent minded people…

ISSN 2161-5543

A Digest of Urban Survival Resources


Why our Middle Class is Screwed

According to the Social Security Administration, the median yearly wage in the United States is just $30,533 at this point.  That means 50 percent of all American workers make at least that much per year, but that also means that 50 percent of all American workers make that much or less per year.  When you divide $30,533 by 12, you get a median monthly wage of just over $2,500.  But of course nobody can provide a middle class standard of living for a family of four for just $2,500 a month.

Here are just a few examples from their official website

-34 percent of all American workers made less than $20,000 last year.

-48 percent of all American workers made less than $30,000 last year.

-59 percent of all American workers made less than $40,000 last year.

-68 percent of all American workers made less than $50,000 last year.

At this moment, the federal poverty level for a family of five is $29,420, and yet about half the workers in the entire country don’t even make that much on a yearly basis.


Why the Middle Class Is Screwed

By Robert Kiyosaki

Last December, Congress passed the largest U.S. tax system overhaul in more than 30 years—a $1.5 trillion tax cut, but America’s middle class will see less than a quarter of the savings under the legislation.  

In 2018, middle-income households—those earning $20,000-$100,000—will see a tax cut of about $930 on average. Just about half of American adults live in middle-class households, down from 61% in 1971 according to the Pew Research Center. For a while now, I’ve been predicting that the middle class would disappear and that we would have only two classes of people in the U.S., the poor and the ultra-rich.

The middle class is made up of people who work for a living, earning wages doing carpentry, plumbing, factory work, and all types of services. They live paycheck to paycheck with very little in savings or investing in retirement.  

Those earning more than $500,000 a year will get $61 billion in cuts in 2019. This includes income earned by pass-through businesses such as partnerships and S-corporations that pay taxes on individual returns. This is because tax cuts for small businesses will help boost the economy—helping job growth.

This isn’t a story of economic gloom, it’s a financial education that you won’t hear through mainstream media. There are four financial forces that cause most people to work hard and yet struggle financially:  

1. Taxes

2. Debt

3. Inflation

4. Retirement

Which one of these four affects you personally?

If he were alive today, my poor dad would have struggled financially even without his bad investments. He most likely would not have been comfortable. Today, the middle class is quickly disappearing.  But it’s a different sort of disappearance than people think. As Jim Rickards writes, “The middle-class numbers are not necessarily getting smaller. The problem is that middle class doesn’t mean what it used to mean.” I believe the population is actually dwindling, but this is an important understanding. There is still a population living and breathing in the 40-60% mid range of earnings. But because all the ways my poor dad achieved a level of financial comfort no longer work in today’s economy, that distinction doesn’t entitle you to the security you would have had even twenty years ago.  

Today, savers are losers, houses are worth less and less, there are no pensions, and essential goods for life are more and more expensive. Today, inequality is higher than it’s ever been.

How the Rich Get Richer

Here’s the kicker. The rich know how to use these forces to make more money rather than have them steal their wealth.  

The rich know how to make investments and run businesses that allow them to pay little to no taxes.

The rich know how to use debt and other people’s money to make investments that provide constant cash flow while paying that debt off.

The rich know how to make investments that hedge against inflation and make them money while others are falling behind.

The rich know how to utilize all these forces to have a secure retirement provided by cash-flowing assets.

The rich can do all of this because they understand how money works and have a high financial IQ.

How So-Called Experts Keep People Poor by Limiting Their Mindset

The problem with conventional advice about money is that it’s not only conventional but also often wrong.  In fact, much of the money advice out there is designed to keep you from becoming poor rather than to inspire a mindset to grow rich.  

The following advice is most often peddled to the middle class:

1. Live below your means

2. Limit takeaways

3. Cash over credit

4. DIY projects

5. Talk to your family about budgeting

6. Set an example

7. Write it down  

Broadly, these can be condensed into three broad categories of bad budgeting advice that are foundational to members of the middle class.

Bad Advice #1: Live in a world of scarcity  

The classic mantra to “live below your means” is one of the most destructive things you can teach someone about money. It teaches people to think in terms of scarcity. “You only have so much, so you must be careful not to run out.” It kills drive to create more.  

Bad Advice #2: Set Limits  

When you live in a world of scarcity, you must find ways to conserve what you have. So, naturally you set limits. Not going out to eat, creating systems to limit spending, and doing everything yourself instead of hiring an expert; all are ways those with a scarcity mindset set limits to “save” money. Unfortunately, they sometimes don’t save money, and even when they do, they feel unfulfilled, stressed, and don’t get to enjoy the things they want to.  

Bad Advice #3: Set the wrong example

Ultimately, if you follow the advice of conventional money experts and model this behavior for your family, you’ll continue to raise generations who struggle to make ends meet financially. Worse yet, you’ll teach them to see the world as one of scarcity, limiting their mindset and potential in the process.

What Can You Do?  

When I do any sort of interview, whether for a news outlet or a blogger, the first question I usually get asked is about why I wrote Rich Dad Poor Dad. I always answer that it was because I saw the financial crisis of today coming and I wanted to help as many people as possible to get out of the rat race.  

The second question is usually about my relationship with Donald Trump. They want to know if I believe that Trump is a great President and will save America. Even though I have great respect for Donald, I don’t think it matters who is in the White House. It is the banks and Wall Street that control our money—and ensures money control your life.  

Today, the middle class has exchanged its wealth for handouts. One explanation is that handouts feel securer than self-reliance. This is a fine sentiment until one day you wake up and realize that you’re poor. It’s even more frightening when you realize the government you rely on is poor too.

If you want to be rich, the choice is clear. You must be fiercely independent. You must take your future and your money into your own hands through financial education—something the government will never hand out.  

Today, your tomorrow can be better than your present. But it will take hard work, discipline, and independence, something often in short supply today.  

Increasingly, which class you belong to will be a function of the choices you make on how you’ll live your life. Will you be independent? Or will you rely on government handouts?

Now, more than ever, it is imperative to stop playing by the old rules of money. The middle class is dying, and the government won’t save it. The rules have changed, and the cards are stacked.  

If you want to not only survive but also thrive financially, it’s time to take matters into your own hands, to educate yourself financially, and to play by the new rules of money.  

Robert Kiyosaki

Editor, Rich Dad Poor Dad Daily

Yours for better living,

Bruce ‘the Poor Man’


Additional New Items

"Particularly distressing findings are that extreme poverty is becoming entrenched in a handful of countries and that the pace of poverty reduction will soon decelerate significantly," the report said.

At the $5.50-a-day threshold, global poverty fell to 46 percent from 67 percent between 1990 and 2015. The bank reported last month that extreme poverty had fallen to 10 percent in 2015.

But ask many borrowers in this generation whether they worry about how the loans will affect their future and you’ll get a slew of bleak replies: It’s stopped them from getting their car fixed, switching jobs, buying a home and having children. Even a tax credit aimed at helping working low- and moderate-income Americans can be seized to repay defaulted student loans.

In closing, Dr. Skidmore says, “How can you have a democracy if you don’t have any transparency whatsoever? Having integrity and confidence is so essential to the whole system, and this just puts everything in question. . . . We should clean this up and show we are legitimate. If we don’t, we are just shooting ourselves in the foot.”

"We're watching what people are going through," Smith said. "We've been through this with Matthew and Irma, but this is a little bit different. This is catastrophic, but it's a reminder for all of us that this could have been our community, and in some ways, it is our community. Please continue to be diligent. Make sure you have your disaster supply kit in place, as well as a plan."

While gold and silver have held up well during the sell-off over the last couple days, Rogers says the precious metals’ could fall.

Lastly, Rogers talks commodities other than precious metals. He says sugar is 80 percent below its all time high.

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Yours for smarter living,

Bruce ‘the Poor Man’



Additional FREE Resources

Your Free Middle Class Survival Kit


Researched by our editors and include 100s of tips, tricks and insider methods of saving money, earning extra money [many from the comfort of your home], the best places to live,  How to find little-known freebies, discounts and other benefits-over 2,000 programs!




Other notes of interest…


Living Frugally In Suburbia
You live differently than your neighbors.



14 Frugal Food-Rescuing Tips from Grandma
These depression-era frugal tips still work today!


8 Simple Ways to Put More Money in Your Pocket
Have more money without working harder!



Knowing When and How to Stockpile Groceries
Stocking up could save your grocery budget!



Emergency Preparedness on a Budget 
Affordable ways to prepare for an emergency.


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Larry said...

All I know it is getting tougher and tougher to get ahead as Wall Street & government costs continue to erode our buying power-the government is the worst abuser. At least you frequently include ways to save money!

Rhonda said...

It is a scary world & has been since Bush & Obama were in office. Many lost their homes and jobs and the only jobs with good wages & benefits remaining are those working for the government.

Gabe said...

Fine article and resources...apparently the message has been lost on those who are marching north from Central America intent on invading North America to grab what crumbs remain in terms of welfare, especially those that CA taxpayers/Democrats are still able to afford to dole out! Ha ha!