Why Think “Tiny House”?

I saw an interesting post on Zerohedege.com about the destruction of the middle class. It promotes a web site at the end but the first 6 minutes are concise, factual insights into a major crisis of America’s middle class and provides a few good pieces of advice.

The first few minutes go over some alarming conditions that “average Americans” find themselves in and are either unwilling or unable to do much about. These include:

• 76% of Americans live paycheck to paycheck
• 46% of Americans have less than $800 in savings
• 27% of Americans have no savings at all
• …and there’s more

When you watch the video, about 5:14 minutes into it, the suggestion to “downsize your house” which will help you get out of debt is one of several suggestions to help you prepare for an uncertain future. When you consider that approximately 10,000 baby boomers a day are retiring (and this statistic will be true for the next 20 years) you begin to see the problem.

If 76% of the people retiring live paycheck to paycheck, then the obvious question is; “how will you pay for your house when the paychecks stop coming in?”. When I went to a class on tiny houses some time back about 70% of the people in attendance were 50+ years old.

So what does this mean to these people?

• A sudden drop in their income when retiring will devastate household budgets forcing retirees into downsizing.
  
• When forced to downsize people will look for alternative housing options that they can afford, whether renting or buying or in a worst case senerio, living on the street. (look around, its already happening)
• If they can’t afford to rent or buy in an area they currently live in (think California or New York) then you will see population migration from more expensive to least expensive areas of the country
• When the shift occurs, those people will be hard pressed to “reinvest” since so many don’t have adequate savings, putting a strain on public and private resources for basic necessities.
• Without much in the way of resources, some of these millions of people will become vulnerable to crime, which in turn will make it even harder to recover into some sort of “normal” lifestyle.
• Those that can find a less expensive place to live will be faced with inflation of the basic necessities such as food, clothing and shelter as well as medical treatment at a time in their lives when they need it most.
• In an attempt to recover, many will have little choice to take jobs that will most likely be part time and without benefits.
• Many will turn to family or friends for help and that brings me to my point…

If you or someone you love is one of the 76% living paycheck to paycheck or one of the 46% with less than a thousand dollars in savings, what can you do to prepare for what appears to be an inevitable downward spiral in your lifestyle or circumstances?

Be Proactive. You need to assess your current situation and come up with a plan of action that might include what the video suggests.

• Reduce or eliminate debt in your life.
• Downsize your housing requirements while the market is stronger and credit is available
• Educate yourself and partner with people that are earning an income so that you can learn to do it as well.
• Don’t procrastinate! Take action today.

Here’s the video….I challenge you to watch and then prepare accordingly.

The Destruction of America’s Middle Class