Thursday, October 8, 2020

Young, Broke, and Educated by Alexander Baima - Book Tour



Finance/Economics

Date Published: September 22

Publisher: Acorn Publishing

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Alexander Baima graduated college with $80,000 in student debt at the age of 23 from one of the top 25 business schools in America. After college he went to work as a financial planner and serviced fortune 500 clients. He created the financial plans that brokers took credit for, and while they grossed millions a year, he made minimum wage.

At 29, his parents had a house with an $80,000 mortgage and a child – and they lived on one income. At 29, Alexander still had over $50,000 in student debt. How could previous generations have so much more than most millennials who still struggle with little hope for the future?

Young, Broke and Educated investigates the decline of purchasing power among young people, especially over the last generation. It explores in basic, easy to understand terms, how economic systems have evolved to hinder the financial success of millennials and the incentives that government, big business and banks have to prevent progressive change.

Alexander Baima, a master in the field of eCommerce and early adopter of blockchain technology, walks you through, step-by-step, what the issues are and what needs to change to ensure that millennials and future generations have access to the same type of success that previous generations took for granted.


 Excerpt
Many people have it in their mind that inflation is a perfect or near perfect representation of the economy. A large number of Americans assume that if inflation rises 3%, the costs of all goods and services will also rise exactly 3%. This is not true. There are many items that have far outpaced inflation and are in fact proportionately more expensive than what previous generations had to pay for them. But how much more expensive are these goods and services? Just how much less purchasing power do people have today in comparison to 20, 30 or 50 years ago? People can argue with their opinions all day long, but they cannot refute hard mathematical proof.

This chapter will focus on inflation and use the Consumer Price Index (CPI) inflation calculator to compare past and present prices. The CPI inflation calculator examines the weighted average of consumer goods and services and is a ballpark estimate of inflationary goods. When I say something is twice or three times as expensive, I am referring to its inflation adjusted value using the Consumer Price Index (CPI) inflation calculator. For those who are confused, this means that the price of a good or service is taken from a time period in the past and converted into today’s dollars using inflation. This inflation adjusted price estimation is then compared to the actual price of this good or service.

According to Statista, the U.S. city average for one pound of sliced bacon in December, 1995, was $2.17. Adjusted for inflation from the 1995 cost, the bacon should cost about $3.49 when adjusted to 2017 dollars (using the CPI inflation calculator). In December, 2017, the actual average price for the same pound of sliced bacon was $5.63. [4] 

In this example we would divide the price of what the bacon was in 2017, ($5.63) by the inflation adjusted 1995 price ($3.49). In this case we discover bacon was about 61.3 % more expensive in 2017, than it was proportionately in 1995. Although not everything in the grocery store has had such significant increases in cost, frozen turkey, steak, dried beans, potatoes, pasta and flour have also significantly outpaced inflation over the last twenty years.

Many people struggle to gauge grocery prices because companies can hide them by changing the quality, weight and packaging of their product. According to consumerist.com, in 2014, Frito-Lay reduced the size of their sun chip bags from ten ounces to only seven. [5] This removed about a third of the chips in every bag, but the price remained the same. Some companies chose to keep bags of their products the same size and just add additional air to make consumers think that they are still getting the same deal as they did before portions were reduced.

The increase in grocery prices might be explained by greater gas taxes or environmental laws. These result in increased overhead costs and make it more expensive to grow and transport food. Higher prices for food could also be due to changes in government subsidies for crops in which the government essentially pays farmers to buy their food and keep it off the market to manage prices. However, food prices are hardly as concerning as many other goods and services that will be covered in this chapter.

One metric that has greatly outpaced inflation is transit. Toll roads, parking costs, individual driving costs, and public transit systems such as subways are part of this category. Most transit costs tend to be an especially large expense for people living in densely populated areas of the United States such as Chicago, San Francisco, Los Angeles, Boston, and New York City. These costs go widely unnoticed to those who are in a position to afford them, but can add up quickly and be a huge challenge for the millions that commute to save money on rent.

I grew up in San Francisco, and noticed how every year toll roads became more expensive. It was surprising how much it cost to cross a bridge every day. For many years, people worked in toll booths featured on multiple bay area bridges, but several years ago these people were replaced by a new technology called the FastPass. The FastPass is a small electronic device placed on the commuter’s windshield to track their tolls. The government also introduced a system that tracks license plates and sends the toll bills to resident’s addresses. You would expect that this process is more efficient so there would be a decrease in toll prices.

One of the most memorable toll bridges from my childhood was the Golden Gate Bridge. There is a one way southbound toll on this bridge which has existed since 1937. On January 1st, 1989, the Golden Gate Bridge introduced a $20 ticket book for sixteen trips across the toll bridge which came out to be $1.25/trip. If you did not have a ticket book, it would cost $2 for a car, and for autos with a trailer the toll was $3. [6] As of 2019, one trip across the Golden Gate Bridge would cost you $8.35 or $7.35 if you had a fast pass. An auto with a one axle trailer would cost you $22.05 and a two-axle trailer would cost $29.40. People who drove a car in 2019 without a fast pass paid almost twice as much proportionally for a trip across the same bridge as they did in 1989. People who drove an auto with a two-axle trailer spent almost five times as much as they did in 1989. 

 About the Author

Alexander Baima received his bachelor’s degree in Business Administration from the University of San Diego. By profession, he has excelled as both an analyst and project manager. He currently holds a CAPM, MOS and SSGB certification in the field of project management. Alex is a talented entrepreneur who specializes in 19th and 20th century porcelain as well as modern innovative computing.

Alex is a firm supporter of Cryptocurrency and believes that this technology will revolutionize the way all countries function within a matter of a few years. He is currently invested in Bitcoin, Ethereum and EOS with the expectations that decentralized applications and smart contracts will be a major contributor to our future.

He has published over 150 articles between LinkedIn and a new social media platform called Steemit. As a millennial, his desire is to help solve many of the great challenges that are plaguing today’s society and engage in intellectual exchanges to help create a better world.

 

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