December 14, 2012

AMERICANS’ BIGGEST ECONOMIC PROBLEM: High Fixed Costs. Funny but in our household both of us — but especially the Insta-Wife — have always tried to keep fixed costs as low as possible. That way it’s easier to adjust your spending if your income takes a hit.

Housing, health care, and education cost the average family 75 percent of their discretionary income in the 2000s. The comparable figure in 1973: 50 percent.

Some of this is due to costs going up, but some of it is to people wanting bigger houses or fancier educations than they did then.

UPDATE: Reader David Schipani writes:

You quoted, “Housing, health care, and education cost the average family 75 percent of their discretionary income in the 2000s. The comparable figure in 1973: 50 percent.” Is it a coincidence that those are the three areas the federal government has been the most involved in providing financial assistance for? If you want to jack the price of something sky-high, get the government to help you pay for it.

Indeed.