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.
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.