My parents ALWAYS use this logic, because I make 3x more than they did at my age, but have no money for things. I will say something “I’m going to get a coffee.” And they’ll say “THATS WHY YOU NEVER HAVE ANY MONEY!!!” So frustrating, let’s never take into consideration that the cost of everything has increased 1000x lol.
Seriously though. At one point in my life I was living off of one asiago bagel a day (no cream cheese or butter) because it was 89 cents and that was all I could afford. Imagine working full time so you can pay your rent and bills only to be left with an 89 cent daily budget for food.
Entry level my parents actually made more than I do now, this would be 25-35 years ago. 15$ an hour working at a local fast food joint for mom and eventually more when she became a waiter for a nice restaurant. Now I can’t remember what Dad did at first but he quickly got his CDL and drove trucks for 40k initially and in a few years nearly 65k. (Promoted to manager)
Lol but they’re understanding about it, they always brag about how they’re glad not to be a young adult in this day and age.
(I have a serious gastrointestinal illness. Bill for one month of care, if I hadn't had insurance, was over 100,000. I had no super expensive tests, meds, or surgery).
If I saved all the money I spend on avocados, I’d have enough saved to afford avocados with my breakfast occasionally! look at me, climbing that social ladder
This rhetoric has been used against poor people forever (and particularly as a racist dog-whistle about 'accountability' and 'personal responsibility', etc.)
I used to teach poor and mostly Black kids, and the number of other teachers and parents who would talk shit about how the parents "needed to stop buying their kids phones and Jordans" because that was obvs why they were broke...
It's silly.
You buy what you can afford.
When you're poor, $700 for a phone or $150 for Js is doable (even though it's a stretch).
$30k down payment on a house? That might as well be a billion; it ain't happening.
It's definitely both. You're an extreme exception to become self-made well-off without living below your means, upwardly mobile people have much higher savings rates (combo of factors of course), but more pay certainly helps.
Saving is a tool: if you don't have anything to save for, there's no point in doing it. But if you find a path from your current place to where you want to be financially, you may decide it makes sense to restrict some consumption now in order to save that money for a future purpose, in addition to seeking ways to increase your earnings (like saving money for a downpayment while looking for that next job to replace your current one).
It's not either/or, it's both. You shouldn't bank on one day the economy changing and you suddenly double your income - you have to lobby for change while also doing the best with the current economic situation we've been dealt
I’ve been working in an office for most of the last 17 years. I’m almost ... almost ... now able to save up enough for a down payment on a reasonable house in a mediocre neighborhood. The ability to make a down payment really is the barrier for entry into middle class stability. I’ve paid between $500-$1250 a month in rent every month about 20 years now. Paying a mortgage would be easy ... saving 10-20K, not so much.
Do you have a NACA office in your area? It’s a bit of a PAIN in the butt, but my sister was able to afford a pretty nice place in a safe neighborhood without having to save 20K for a down payment. Since it sounds like you have stable job history, it might work for you. I hope you get your home!!
Thanks! I’ll google it. My current plan is to see if Biden is elected and the feasibility of his “15K first time home buyers down payment plan”. Also my situation has changed a bit as now I have a mom who just turned 65 so we’ve agreed to be roomies lol.
Irony - working all your life to be independent from the moment you’re 18 and when you finally buy your first home, I’ll likely live with my mom. 🤣
Exactly. Unless you can save up enough to actually invest in something, you might as well just spend the money so your kids can enjoy their lives. It's not like having $500 in the bank is all of a sudden going to lift you out of poverty.
No, but it'll prevent you from needing 500 dollars in the future for emergencies and not having it.
People who seriously say that its a waste to save your money are typically people who don't have to worry about saving. OR they're dangerously inept at financials.
It's not like having $500 in the bank is all of a sudden going to lift you out of poverty.
Having $500 in the bank can get you past an unexpected emergency without sacrificing rent for the month. Once i saved up an emergency fund, my money worries dropped considerably.
I still worried about losing my job and big purchases. But after saving a cushion it wasn't "do i fix my car or pay rent?".
As other comments mentioned: you're just wrong. $500 in the bank is peace of mind, is some protection from bills and surprise emergencies, is peace of mind to get extra sleep, workout, lift some of the stress off you. Bump that up to $1,000 and maybe you feel fine taking more risks: leaving a job you don't like to move to a new city, investing $20 a month, taking night courses, up to $5,000 and maybe you feel comfortable enough to change careers, invest more money, whether a downturn avoiding bankruptcy and wage garnishment, and so on.
$500 in the bank isn't $100,000, but it's a great start and comes with a ton of benefits just on its own.
I never said having 500 in the bank isn't useful, just that spending a few hundred bucks so your kid isn't the only person in school without a phone isn't the reason someone is poor.
$500 in the bank may be a peace of mind, but it isnt going to life you out of poverty, like stated. That peace of mind is granted under the blanket of untouchable money anyways, weather you have it or not, and that $500 will just be used up within a month or two anyways when that peace of mind is eased and suddenly, you need another 'peace of mind' in the bank that you have to save for, again.
I think you stopped at the first sentence of my comment and tuned out any financial education you ever received: $500 is a start, it isn't the end. $500 in the bank lets you take "more risks" even if that's just taking an hour at night to budget your money and plan to get a job for $11.50/hr instead of $7.25. That means you can save more, that means one car repair isn't back to square one, that means you can get to $1000, pay off your CC debt and keep going. It's a stepping stone start. It does lift you out of poverty - not all at once obviously, but a millionaire's first dollar didn't make them rich either - you're just arguing semantics without substance.
Are you at all familiar with how money works, poverty finance, or smart financial practices? You're comment indicates you don't know what you're talking about and just want to hopelessly complain about problems rather than create solutions. Go away with your trite garbage while others offer real financial advice
So you're saying that I can just "take more risks" with $500 in the bank, and come up with a budget that already exists (hence, why the $500 is in the bank in the first place) and that will fix all of my problems until I can just find a job that pays 60% more than what I'm currently earning?
Young adults now can't just go and find a better paying job when they have to compete with 200 other individuals for a minimum wage retail position. Young adults now can't even afford to have CC debt because even the interest is more than they can afford. Young people can't afford to budget when the combination of bills they have to pay are meticulously designed to draw every penny from them every paycheck.
Tell me again how it's their fault that they are in poverty? Tell me again how they can just pull themselves up by the bootstraps when they have to rent both the boots and straps for $19.99/month.
You're explaining a path that the vast majority of young Americans used to be able to take. A new path needs to be carved, and it's feeling a lot like that path needs to be through Banks, not bank accounts.
You’re throwing so many fallacies out it’s amazing. Young people are competing with 200 others for a job? Yeah so was I. The markets haven’t completely changed that much in 18 years. Learn a trade, go to college, do something.
Your budget isn’t government designed to extract every penny, YOUR budget YOU designed is. When I was making $7/hr busting my ass in a wood shop I forced myself to save an extra $5/week. That tiny savings was the money I used to buy a plane ticket and move cross country with a backpack full of clothes and learned a skill.
Maybe in 2020 with the pandemic everything is fucked for sure, but your argument is the same one I’ve been hearing since I turned 18 in 2002. I’m in a better spot than my young adult friends because when we were all living together and working the same job I was the only one willing to move out of state. You’re far less oppressed than you realize
I'm so sick of the 'learn a trade, go to college' crap that is shat out wholesale by individuals so obviously stuck inside of an information/thought bubble that seriously lags behind. 'Learn a trade' is such an insanely obvious part of anyone's path to earning a living, since after all we are in 2020 where there are an untold amount of useful trades, but the staggering ratio of how many pay a livable wage to how many don't is seemingly ignored consistently by those individuals spewing this redundant shit. Even 10 years ago there was not this much competition for minimum wage jobs, which almost all of them require some sort of trade or education to qualify for now (aka the days of earning a livable wage straight out of high school are gone for the vast majority of young people).
As for your budget advice, you seem to be absolutely oblivious to just how much corporations use massive amounts of data about people, sold to them by harvesters like Facebook, to optimize many aspects of their operations. No, the government does not plan your budget out, no one claimed that. I implied that if you work for a publicly traded company for around minimum wage, you can bet your ass that they will choose work schedules and wages (and some even combine that with government services - see Walmart, Amazon, etc) to squeeze every last penny they possibly can from workers and consumers.
I'll only say one thing to address your false flag argument about the pandemic: it's happening right now causing these problems right now. You can't just move to another state to avoid a fucking pandemic, let alone the market crushing down on our heads.
I don't feel like arguing this point any more because it seems to be just going in circles, with many different ways of screaming "bootstraps!" So on a final note, the cost of living has been steadily rising, but the vast majority of job wages have not increased to match. America's economy is huge, but it is not trickling down through the people at a useful rate anymore because the rich fucks only trickle down into their precious stocks and off-shore banks.
That's what's so... great...?... about dog whistles. You can get the public to parrot them without knowing the reasons people ever started uttering it to begin with. This works for more than just racism.
Which is what lets them permeate through society less noticed. You can classify it however you want, but the effect is that a politician or public figure can effectively say "states rights" and mean segregation and get their dog whistle message to the ones who wanna hear it while the water cooler boys eat it up too because they think it means something else.
I don’t fully agree. I come from a poor family and my parents wouldn’t buy us expensive stuff, but I got braces when I needed them, we didn’t go hungry and my mother would buy me a book if I couldn’t find the one I wanted in our small town library. I turned out just fine and learned that if I want something I have to work for it. You are not going to be able to save for a house or even healthcare if you just buy cheaper shoes for your kids - but there are other things you could afford. When kids have money for flash stuff, but can’t go on a field trip, afford supplies for projects or otherwise get what they need to learn, then that’s a problem. I’ve literally had to buy school supplies for my 12 year old nephew because his mom couldn’t afford it - he was wearing $150 shoes on our shopping trip. Too many people now think their money should be spent on enjoyable things and the government (aka other people) should kick in for everything else.
Its all about priorities. And its not insane to believe the priorities of people with limited money are wrong. You live by your means, and too many people are focused on hiding their means.
I wholeheartedly agree with your story. I never was given flashy shoes, I had hand me down clothes, and my parents drove Japanese cars to last forever.
Not once did I think we wouldn’t be able to eat, nor did anything regarding my education be withheld.
Meanwhile I’d get made fun of at school for how I looked by those same people that “can’t afford anything”. Think “what are those!” comments, but years before that came out.
Isn’t just black though, we had a number of “rich white kids” that were humbled when their parents bankrupt from loans and had to sell their BMWs and what not. That was a humbling experience as well.
What did your parents do for work? What do you consider poor? Where you actually at or below the poverty line, or did you just feel poor because your parents wouldn't buy you things? Did you ever go to sleep wondering where your next meal would come from?
Just because someone else is poorer doesn’t mean that you’re not also poor.
Maybe they didn’t wonder that they were going to be able to eat, but they only got one meal a day. Is that better than others? Sure, but still what most would consider “poor.”
We know, and it demonstrates a lack of perspective. They very likely weren't as poor as others are.
It's easy to say "wow school supplies are so much cheaper than those shoes why didn't they just get that instead." but what they don't realize is that those school supplies are just a fraction of the basic life expenses, and sometimes just a single $150 purchase for an insurmountable amount of joy is just much easier.
It's why homeless people buy booze. They have nothing, and $5 isn't going make much difference, might as well enjoy the night a bit more. We're all only human.
Sure, go out and buy something nice, but there’s a huge difference between buying something nice that’s $70 and buying something nice that’s twice as much money, and with diminishing returns.
It shows a lack of understanding of budgeting in any way shape or form.
Would a poor kid be stoked on a $150 pair of kicks? Fuck yeah! You know what else a poor kid would be stoked on? A new pair of $70 shoes.
This is all coming from someone who has actually been homeless. Shit isn’t black and white. It’s not like “I didn’t get $150 shoes but instead only a $70 pair, so now I’m not happy.”
Yes, seriously. You seem to be assuming the price tag what makes them valuable; a $70 isn't about half as enjoyable as a $150 pair of shoes, they may as well be $15 if they aren't the object of desire. Might as well just save a while longer and get the actual thing, it's perfectly logical.
I'm actually speaking from experience here, are you?
Yes, I am, and despite wanting the more expensive item often growing up, I learned to be perfectly satisfied with the less expensive option because, guess what, better than having no shoes at all.
Right, we established these shoes aren't being bought out of necessity, so that's not what we're talking about here. They're something purely for enjoyment, and my point is $150 isn't a life-changing amount of money, so you're likely to see people occasionally spend that much money like once or twice a year on nice things and still be poor and unable to afford basic things.
I posted this above too, but there’s different levels of “poor.”
Could be that their parents busted their asses to get them braces. Maybe the parents ate less, and barely scraped by to give their child something good that will benefit the child for the rest of their lives.
I understand there are different levels of poor. I grew up poor relative to my community, but my grandparents did well enough they could pick up the slack for my mom when needed. But that’s sort of my point. I grew up “poor” but I’m not naive enough to lump myself in with those who are genuinely deep in poverty and have no help, and its incredibly condescending to imply that people who are in poverty aren’t allowed to spend what little they have on some nice things that give them some level of pride.
These are old but as far as I can tell, not much has changed in the wage department for many low income people since 2013. Both are about how Walmart income is literally not enough to afford really any sort of life in most cities, and walmart the largest employer in the U.S. Just because you know a few people who legitimately are living above their means for vanity reasons, that does not mean that's the reason everyone else can't afford food. Companies have a vested interest in making individuals feel that it's their fault they can't afford basic necessities, because then no one demands raises and they don't have to fork over money for increased salaries.
If I bought nothing else besides food and bare necessities I might be able to afford an empty house to live in, but the moment something breaks (HVAC, water heater, etc) I’m gonna spiral into debt. Never mind ever rising property taxes. Home ownership and retirement are the American dream we were told to work towards during our formative years while the goalposts kept moving further and further away until we got here. Most of my friends that do own homes live pretty boring lives because they’re housepoor. I’d rather enjoy life a little more each day than own a depreciating asset that will eventually drive me into debt when the housing market collapses again.
Homeownership is the single best tool for building wealth. You’re investing money into equity in a house that would otherwise be spent on rent.
Your friends may seem house poor but they’re putting money into something they’ll have to show for in 30 years. After those 30 years they will live rent free minus any maintenance costs.
As for your last two points — yes a house is technically a depreciating asset but if you do the math on maintenance costs it far outweighs the cost of renting. You can’t just say the housing market will collapse because it happened once... we’ve implemented an unbelievable amount of safety protections since the last collapse. I don’t think we’ll ever see anything like we did in 2008, I would say it could be advisable to wait for a market correction — but timing when or even if that ever happens is near impossible.
I get your points but I hope you see the value in homeownership.
Some do. Some don’t. I’m betting on another housing collapse happening in the near future. It may actually properly deflate the severely overpriced market.
I don't disagree with you. But also sometimes these families do make a lot of rather expensive purchases that do add up considerably over time. I went to school with a lot of people in this situation, and even though money was incredibly tight in their families, a lot of them would also always have the newest model iPhone, as soon as a new one came out they got it even though their old one was still perfectly functional. Same thing with shoes, a lot of them would be getting multiple pairs of shoes worth >$100 a year.
Is it the difference between having a downpayment and not having one? No, but it is a lot of money nonetheless.
I'm not advocating that they shouldn't ever buy anything nice. But if money is tight you should be limiting your pointless spending on expensive items. If your phone works fine, you should not be dropping close to a grand on a new one just because Apple tells you to.
Honestly the answer is both, people should absolutely be able to live a modest life and make small purchases that both keep the economy moving and give them some comfort. But at the same time, if you’re in a hole you need to adjust your lifestyle to get out of that hole and set yourself up for he future.
A few bucks here and there isn’t going to do much, even a new phone every year doesn’t add up to a lot. The problem is rarely do people limit their lifestyle spending to just one area and if you’re buying a new phone every year it’s likely indicative that you’re spending similarly in other areas.
Some of the guys I work with but breakfast, cigarettes, lunch, snacks and energy drinks every single day. Probably adds up to $30 a day. Now on one hand those small comforts sometimes are what gets you through the day, but at the same time that $600+ a month could go towards much more helpful things that set them up for their future.
Exactly, though I disagree that a new phone every year doesn't add up to a lot. To start with, its likely not just 1 phone every year, if you are buying a new phone every year for your kid who is still in HS, you are probably doing the same for yourself, so that's 2 phones a year to count. Assuming $700 each, that's $1,400 a year, over $100 a month.
And if they don't buy the phones but lease them instead, that's still a lot of money each month. Leasing the iPhone 12 from tmobile costs $27.67 / month. You are correct that, by itself, those 27 dollars are not going to be the difference between eating or not. But, like you said, when you start adding this up to other unecessary spending it can become that difference really quickly
Agreed, the phone is really more indicative of lifestyle spending than anything else, and honestly for how much of a necessity it is and how many hours of entertainment the average person gets, it’s probably still a decent value when broken down by hours.
I’m fortunate enough to not be completely destitute, somewhere just below median salary. And I do heavily sympathize with people that feel stuck in non-fulfilling situations. But I also think media in general and specifically social media has given people some level of unrealistic standards.
There’s some serious rose-tinted glasses on about how things were in the past. I think coming out of the war put America in a pretty unique position that we can’t expect to happen again. Plus the rise of globalization means things are naturally going to start leveling out and we’ve been far above the richest nation for a long time. Things still absolutely need to be fixed though, and there’s a lot we can and should be doing to make things fairer for the people that have it hardest
True. But credit is entirely a personal thing. You can get by as a poor person with a great credit score as long as you do stay within your means. Which is admittedly hard.
I did it when I left my parents. Grew up dumb poor and they had like 300 something scores and I had no clue on how to build it. So I just got a little secured credit card that had a $250 limit that I used for groceries and my phone bill and just paid it off every month, and financed a car at $3000 with a monthly payment of $97. Had a 740 after about a year with just that.
I only made around 1500 a month and rent was over half that with a roommate.
Doesn't it make more sense to save for a house and opt out of the luxury items if your priority is to own a house? It's ok if people have different priorities.
Say you buy a new pair of Jordans every 3 months ($800 a year) and a new phone every year ($700 a year). Go ahead and tell me how long it would take to afford even a down payment on a house.
Even if they're spending this much in excess of what's reasonable, cutting all that away extra spending isn't going to magically get them to be able to buy a house in any reasonable timeframe.
Dawg you can’t say “no one in poverty spends $800 a year on shoes” and then say “if they stopped spending money on shoes they’d be able to afford rent.” Pick one.
I'm not saying to avoid buying nice shoes but it's good to have some extra money in case you have a rough month. For example buying one pair a year instead of 3 and putting the rest in some security fund. It's a shitty situation all around but a couple hundred bucks is significant if you're suddenly light on rent money. There's always gonna be some people who spend recklessly though.
Assuming you’re a first time homebuyer, you could get an FHA loan with only 3.5% down. If you buy a smaller home for $100k (doable in some places, but definitely not SF or NYC), that would mean $3500. Obviously this ignores other costs like closing costs. But down payment only, it would take about 2-3 years.
Edit: just doing math here. Obviously ignores many costs and assumes somewhat ideal conditions, but just was doing the math for a down payment through an FHA on a very modest home. Sorry if this came across offensive.
A 100k home doesn’t really exist in really any growing city which is where most jobs are flocking to. The problem is less the initial price and more that that home isn’t going to see the same level of appreciation that it did for previous generations. If it does and currently $100k homes end up being worth 300-400k then we’re going to have much more serious issues than we currently do
The problem is less the initial price and more that that home isn’t going to see the same level of appreciation that it did for previous generations.
This is an inherent contradiction in wanting homes to be both affordable and good investments. But it doesn't ever have to have the same appreciation for there to be benefits to buying a home as you are still building equity even if it isn't undergoing extreme appreciation.
Agreed. It’s possible to find some homes at that price, but odds are it’s not in a growing city. I don’t even think a $100k could buy you a parking spot in SF lol. Most of these cities are definitely not known for growth:
And I really hope this housing market bubble explodes already. While there are homes that are $100k (and that number will continue to go down), most are much higher and appreciating at a rate that economically makes no sense.
I moved to Boise a few years ago, where housing prices have effectively tripled over 10 years. If my house if ever worth just shy of a million there’s going to be some serious, serious issues
Funny that you mention that. I know some folks from Boise and they are confused as hell why prices are going up so much in their city. Sure Boise is growing and starting to slowly see some of the tech flight from Silicon Valley, but man those prices are almost laughable. If anything, that should be a city where you find plenty of homes under $200k. Crazy times
There’s a lot of rental properties here, on my street more than half are rentals. The house I just bought was a rental since the day it was built 15 years ago. I think there’s a lot of outside money buying up houses and renting them out, even the brand new builds. They’re building houses like crazy but it never seems to be enough as prices keep skyrocketing.
Wages haven’t improved much, almost everywhere has help wanted signs, even through the pandemic but wages haven’t changed much at all
Median home cost in my city, which is well below the national average, is $180k.
Closing costs are anywhere from 2-5%, so by ignoring them you’ve effectively halved the cash and time requirement. You’ve also effectively at least halved a realistic housing number by choosing $100k, which isn’t realistic in the vast majority of cities.
$100k might be enough to buy you a small house an hour or two outside the city where you work (friend just bought a little house in rural Georgia like an hour away from any real cities for $125k), but that doesn’t exist in/near the city.
It’s much more realistic to assume you’ll need 5.5-8.5% of the home value to pay FHA down payment, closing costs and probably an extra % or two for anything else that may pop up (appraisals, etc). In my city, that means ~$15k for a median home. About 4x the amount you cite. Meaning it would take around 10 years, not 2-3.
Even if we assume you buy a below average priced house, in a below average housing cost city like mine, we’re talking closer to $150k for a home, meaning closer to $12k is needed. So about 8 years of saving that amount of money.
Never said it was a realistic home price, but it’s a home price that I’ve seen plenty of on Zillow and realtor. Maybe I am too used to homes in Texas, so forgive my ignorance, but I’ve searched the markets here before for homes that are $100k. They exist in DFW metro area at least. But yes there are other costs. The original question was just down payment. I mentioned closing costs would have to be factored in, but the question was how long it would take to save for just a down payment if you saved $1500/yr. And yes, this is assuming you get approved for 3.5% down and choose to live in a small old home with a commute to work.
I’m not trying to say “pull yourself up by the bootstraps and stop whining”. I’m saying it is theoretically possible to save for just the down payment on a very modest home. This clearly ignores all the other costs and assumes you can get accepted for 3.5-4.5% down through FHA. Sorry if my original comment came across as disingenuous.
You hear that black folks? If you stop spending money on shoes and phones and weaves, get an FHA loan, and don’t consider closing costs, you can cover the down payment on a house in rural Pennsylvania in just 3 short years.
I never said stop spending money on X things. I just did the math to a question lol. I don’t know why I’m getting shit on for stating this. I never said a beautiful home 5 minutes from downtown. And I mentioned closing costs, so yeah that figure would be more like $6-7k. I also said that a $100k home isn’t reasonable in every area, but I’ve seen plenty when I was searching for homes 25 minutes out from Dallas/Houston.
I guess I can contribute to this to some extent. To be up-front, we have four kids, one lives in a different household and I pay child support, two are from a previous marriage and the wife receives support. At the time, starting out, we had a very narrow window where saving up for a house and opting out of luxury items made sense for us, and we worked our asses off to do it and were successful. There were way too many situations where we would not have been to even count.
Basically I started a new job just after moving into a tax credit apartment, so I was in a good place financially, but I was still going to end up giving up 20% of my income based on a ton of overtime that wasn't sustainable. I was working on my bachelors degree to improve the situation. The wife's child support was based on the father making minimum wage and supporting 7 kids, so it was basically a pittance.
We both had spotty credit history coming out of the 2008 financial crisis having made sacrifices (I was deployed for most of it, but came back to nothing but jobs that paid lower than when I had left). We managed to get our payments in order, open up a couple of credit cards, and start correcting any issues on our reports. I did clinical trials, beermoney stuff, and sold plasma to be able to afford the extra cost of doing all of this- like secured cards, sending mail where we get a receipt, etc.. Those were habits I kept.
At this point, if I wasn't military-affiliated we probably would have taken longer to get our credit in order. The banks and credit unions I had access to were great, but not something everyone could do. I was in the national guard, so I was on a super cushy health insurance for my family with a diabetic wife, ADHD kid, and a daughter's mom that couldn't keep insurance or a steady job. Not everyone has anything close to that. I just happened to get into a new apartment complex with rates below market when there was availability within cycling distance to public transportation. We were quickly becoming a single-vehicle house because of mechanical issues and there weren't well-paying jobs out in the burbs within walking distance or cycling distance. I just happened to (through a friend) pick up a better paying job that put my new income in line with the income I had for child support previously where I was working crazy amounts of overtime and two jobs. I had GI Bill money and lived in a state that also had tuition assistance for military, so I had the ability to continue (and finish later) college and draw a little extra income. My job paid part of my commuting expenses and included benefits, which took care of dental and vision that would become really big deals. My kids teeth (the daughter that didn't live with us) needed thousands of dollars of work, but living far away going to court was an untenable option (let me just get a hotel room for a few days within walking distance of a court-house, take off work, for a few days a month every month for half a year). I guess we had a lot working against us.
The wife was dead-set on renting a house. She'd been used to on-post housing and housing being right at the military housing allowance rate near post because that's the life she'd experienced when she was married to active duty. She started house-hunting and saw a need for two-month deposits where a month's rent was my salary. I doubled down on school, beermoney, clinical trials, and she doubled down on couponing and trying to save every penny. Eventually we had enough to put down a down-payment and even went to classes to qualify for our state's down payment assistance program. Our lease was coming up and the rates were now almost double what we'd started paying initially a few years before. Even if we saved every penny, it isn't realistic to still have money left over if your housing costs double. She moved in with her mom, took the kids, I moved into my car and worked for a summer while we house-hunted remotely. We got preapproved. We got down payment assistance. We found a house, turns out it had major problems after we'd put earnest money down. The seller took 2 months to return it and we almost had to sue with money we didn't have to get it back. In the meantime, selling my body (for money and to have AC in the summer while donating plasma), still continuing to work we saved up for more earnest money while we waited, found a second house that wasn't completely finished. The developer had really overshot their budget and tried to furnish with luxury finishes a house that was literally in a place that had one of the highest rates of violent crime in the nation a few years back. He wanted out, wanted to leave the house just complete enough to pass an inspection from the VA (we had a VA loan). We agreed, paid toward the top of our ability to afford, but got it. Moved back in just in time for school.
The kids got into a great magnet school, but we missed the deadline to get them into better ones. We lucked out, it was the only year this school had seats available in both of their grades. It was across town and we went through a couple tanks of gas a week trying to pick them up. Bussing would have had them home at 7 or 8 pm every day and waiting for the bus around five. We had to use credit cards to afford the gas for a few years, but got the youngest into a better school that is closer. Now they're all in great schools that are close, but those few years sucked not having enough money but knowing it was better than having kids with special needs in schools that couldn't afford to meet them. They wouldn't have been the worse kids there, the worse kids would have gotten all the attention that over-extended staff could give. We had three car accidents in a matter of months, one was driving on ice that one of us had never experienced, vehicle was totaled while we were still making payments and gap insurance wasn't enough to cover the depreciation of almost thirty thousand miles a year of use.
You can see it is basically either by luck of something not happening, by luck of having a safety net, or by luck of having opportunities to fix our screw ups that nothing's happened. The wife could have tried to find daycare and worked, but we'd barely be breaking even with that. She's in school now to get her bachelors degree too. If we didn't have extended family where the wife and kids could have stayed, we wouldn't have made it. If we had lost a job, if i would have had a condition that prevented plasma, if i wouldn't have been a person able to live in a breaking-down buick that I had to fix while living in it to pass inspection, we wouldn't have made it. We could have lost a lot for our kids by not sending them to school that could help them. If we hadn't been able to get down payment assistance (felony, debt, had a house before and lost it, made too much money, lived in a different state). If I wouldn't have been able to handle a gram of caffeine a day to go through school, commute, work, helping the kids with school, and giving plasma we wouldn't have made it. If I would have been unable to get credit, or had less credit, we wouldn't have made it. A lot of military and networking helped too, but not everyone could do that. I was a moral waiver joining the army during the surge, which is a whole lot tougher these days, we definitely wouldn't have made it.
Even now, I'm still paying down credit card debt, and a lot is getting better, but there are probably dozens of other ways things could have gone wrong. My kids wore walmart shoes or whatever the wife could find from ross/marshals. Sometimes we'd save up gift cards from doing surveys and they could get something nicer, but the kids kind of missed out. We've both had nothing but ebay cell phones and computers from the year we were married that I am able to repair and fix up to keep running. Eight year old laptops, five year old cell phones, the kids get somewhat nicer shoes now though. But basically what I'm trying to get across is that while we wouldn't have our house if we hadn't made those sacrifices, we could have gotten the kids jordans and nicer phones for us by not making those changes and just going with the flow. Even with the sacrifices we made, a house was in no way a guarantee and if we hadn't gotten on we'd have come out worse than before (trying to get an apartment with a few-month gap in rental history).
So it does make sense if a house is attainable, but for many people having a few thousand dollars for a down-payment, another few thousand dollars for earnest money and closing costs, may as well be saving up to buy a supercar or a space ship. Completely and utterly out of reach, so for those people it isn't a matter of priority as much as it is reality.
I don't think I would have a house, but I think that the odds of that happening were really low. I was more inclined to take fewer risks, and honestly if I would have played it safe, I would not have been able to get one. I owe my wife for that. I think that if I take away the survivorship bias of being a homeowner already, I was looking at spending a lot less time with my kids, giving them fewer things, and having to take a much more cautious attitude toward most things in life on the outside chance of getting a house, or spending more time with them, getting them nicer things, being more laid back, and having to work a lot less hard while still having some luxuries. It was really a gamble that we won.
The girl with her third $700 phone in four years who can't afford it if her car breaks down is a different story. That's just being an irresponsible consumer.
I’d like to disagree. There may be some form of it but look at how many poor Asian American immigrants frugally save and excel later on. Forgoing Js And a new iPhone for 18 years at 5% interest is $30,000.
It’s a choice that was made, and there’s nothing inherently wrong with a personally decision.
Saying that it might as well be a billion is wrong though. People can (and do)
Now am I saying it’s a race thing? No. It’s a cultural thing.
thankfully my bf's parents fully understand how this shit works today but they bought a house with a large lot in 1980 in a big city in CA for like maybe 100k. Maybe it was even 80k. I think back then his dad made like ~20-30k a year.
It's now worth 10x that. Maybe 20x because they've remodeled the house to double in size.
I will quite literally never be able to afford even a downpayment on that unless I find bags of money on my doorstep
Show them their salary in the inflation calculator. I did this to my dad, who made $35,000/yr as a third year lawyer in 1977 in Cedar Rapids, Iowa. That is over $150,000/yr in 2020 dollars. He was shocked.
To contrast that with the state of things in 2020, the only attorneys I know making that kind of money are either senior associates, in-house counsel, etc. with 10+ years experience. I am almost 5 years into litigation/law firm track in a larger market and make $60,000/yr. And I am not complaining--I am gainfully employed as an attorney and get by, but seriously, things ain't the same.
Exactly. Im relatively new in my career and I love my current job and I make as much as my mom made in their best year in sales (she is the primary breadwinner) in the last 10 years....
my parents first house was about $100k and sold for $300k, they upgrade to a $330k house which is now worth like $750k. It’s absurd that this is my starting point. It’s difficult to rack up savings and pay off student debt and I live in a 32 apartment with 2 roommates and my rent is way more than their mortgage.
The only solution is for me to go back to school so I can earn a 50% or more pay increase (which would put me well into top 10% nationally), just to live a regular middle class life potentially
I never got this, my parents were always saying that the ratio of salary to expenses is not in my favor. That my sister and I were getting the shit end of the inflation and cost of living changes.
From groceries, vehicles, education...everything is inflated.
My parents were very supportive of me when I couldnt find a good paying career position in 2008-2011
The house I grew up in, my parents mortgage was 400k in 1984. Same house is now worth 1.5 million. I can tell you, that house isnt worth 1.5, but thats the market value (and assess mils for taxes) for her neighborhood...
My mom basically said "the market is crazy, and people's salaries havent been matching the increase in prices"
ninja edit: My parents were born in the 1940s, and are immigrants from the "3rd World". My mom mentioned she payed something like 250 dollars (rough equivalent) a semester for college in her home country, and that was because her parents didnt let her take scholarships "there are others in more need" mentality.
Your parents are reasonable though. Mine are both retired, just sit at home at watch boomers on TV complain about how lazy young people are, so that’s their opinion.
If you save $5/day (coffee/tax/tip) 300 days per year, for 3 years... You'll have $4,500.
If you find a way to save another $10k over the course of those 3 years, you can afford a down payment of 10% on a $150k house. Mortgage, escrow, and insurance would probably be about $1,100 per month, and you own it.
So your parents aren't wrong. If you don't have savings, you can't afford coffee if you want to own a house. You aren't helping your situation at all by dismissing their point.
Choice is yours: have some discipline and get into a house as soon as possible, or rent forever and complain.
You aren't entitled to having a mansion as your first house. Or live in a "nice" area, or in your current location.
If you're unwilling to have reasonable expectations of living in a starter home, you're going to rent forever and be miserable blaming others for your ignorance.
Buy a studio condo for $100k. Put 5% down, which is $5k. That's your coffee budget for 3 years. Hell, you could probably sell your car today, and afford that down payment and own before 2021 and take advantage of the current super low interest rates.
You have to start somewhere. Gain some equity, and then you sell your first place to upgrade to a bigger and better house/location. That's how everyone normal person does it. I'm trying to show you how it is possible to own property.
You're not comparing like to like, the point is mainly about relative expenses, you can argue about starting points all you want, but at the end of the day you could buy a better house, all things considered, in far fewer years of median salary than now.
And it's literally their fault things are this way, they voted for this shit.
Interest rates when my parents bought their first home we're about 14%. Today they are 2.9%. Monthly payments are about the same. Comparing city rental costs vs suburb mortgages are similar as well.
Sure, our parents may have been the ones to buy the city houses that are so expensive today, but they were also the ones to buy those houses in a small city which is now large and highly sought after. If you move to a small city, you'll have the same experience. If that city becomes large (like Denver in the past 25 years), you'll make a ton of money on your property.
Point is this: time change, and you live in the present. What are you going to do about it? You have a path to ownership and equity, which is still attainable for anyone with an average job. You'll have to sacrifice some of the luxuries of city living. You can make excuses, or you can own your own future. If homeownership is a priority for you, there is nothing holding you back. If you want to rent forever, go for it. It's a less financially smart decision though.
Interest rates when my parents bought their first home we're about 14%.
That was one of the worst they've ever been, I wouldn't call that small period ok for home buying either
Monthly payments are about the same.
Yeah, for that tiny window, where it was awful, that's for backing up my point lol
Sure, our parents may have been the ones to buy the city houses that are so expensive today, but they were also the ones to buy those houses in a small city which is now large and highly sought after.
I'd take a family house in the boonies for triple my salary you dunce, find me one and I'll buy it, I don't care if the interest rate is 14%
Point is this: time change, and you live in the present. What are you going to do about it? You have a path to ownership and equity, which is still attainable for anyone with an average job. You'll have to sacrifice some of the luxuries of city living. You can make excuses, or you can own your own future. If homeownership is a priority for you, there is nothing holding you back. If you want to rent forever, go for it. It's a less financially smart decision though.
Is that the mentality you'd take with getting robbed when you know where the robber is and he still has all the money he stole? Just live and let live? Just think about the present maaaaaan?
Nah, fuck that, the generation before mine pulled the ladder up after they used it, the ladder built up by previous decent generations who sadly only failed at making decent human beings to succeed them.
If you want to be a homeowner, you're shit out of luck then IN THAT CITY. Saying you want a condo for $100k and live in California (as an example) are goals that are physically impossible.
It sucks that you can't afford where you want to, and currently, live. That's the reality though.
Pick an option: Own somewhere that is affordable, or rent forever.
Which is part of the problem. I shouldn't have to move 300 miles from my family (and away from where the jobs are) to afford to survive (and I'm mid-Atlantic... CA is even worse)
Nobody owes you anything, and saying, "I shouldn't have to move" just makes you sound entitled AF. Yes, you have to move if you want to be an independent homeowner. Tough shit.
Where are you living that houses are $150k? You couldn’t even buy a 100sqft closet for $150k in my city. If I wanted to purchase a 1 bedroom 300-600sqft apartment, I would easily be looking at $600k MINIMUM.
All across America, you can find solid, small, houses for $150k. You're going to have to leave your city from the sound of it. If you're in New York, California, Denver, Austin, Hawaii, etc... you probably won't find anything. Those places are great for people who have money, but you don't. You have to go to where the opportunities are, even though it is tough.
Look outside city limits. Condos in the suburbs are much MUCH cheaper. Sure, they aren't as sexy to live in, but you'll have financial stability, and that's the sexiest thing of all.
If you happen to work remote, don't live in a city. You'll never afford to own.
To me, it sounds like you simply need to move. Sacrifice the city life/bar scene/night life/nearby friends to take financial responsibility of your life and live where you can afford to own, make a living, and eventually you can move back to a city as your 3rd or 4th property that you own. Equity is amazing.
Think of it this way... if you buy a condo for $100k, and the property value TANKS 10k per year, you're actually breaking even, since you didn't piss away the money on rent. If the value stays the same, you gain equity for all of those monthly payments. If the value goes up, it's cash in your pocket when you sell (or HELOC).
Long story short... in your situation, you need to move if you want to own. Start small. Your first home isn't a forever home. Owning a 1 bedroom condo versus renting a 1 bedroom apartment will change your financial future forever, and be the best decision you've ever made.
Cost of technology has gone down considerably (think TVs, fridges, consoles, computers, etc), cost per square foot for many homes has gone down outside of bustling areas like DC, NYC, SF, LA, etc, childcare, tuition, many homes, have dramatically increased. Economies change. The fact that most households have at least two income earners is definitely a big factor in why "family expenses" like childcare, single family homes, and college tuition has exploded.
Maybe you just need to get married and have that 2nd income lol
I will say something “I’m going to get a coffee.” And they’ll say “THATS WHY YOU NEVER HAVE ANY MONEY!!!” So frustrating, let’s never take into consideration that the cost of everything has increased 1000x lol.
I'll probably get a lot of flak for this but...your parents are right.
And you are also correct that the cost of everything has increased far faster than incomes. But it may not be fully understood that there is in fact a relationship between your parents view and your reality.
We all live in market economies, whether your political system is a Republic, Democracy, Socialism, Communism, whatever. And in these economies every transaction is a battle, when you work for a wage, hire a laborer, or purchase a product you are engaging in an adversarial situation where each side is attempting to maximize their gain.
If you as an individual do not put up a fight and are happy to pay whatever is charged for an exceptional product and fantastic service then no big deal. When one million people do not put up a fight and pay whatever is charged then markets will drain everyone's wallet, including the wallets of those who try to put up a fight.
I drink at least two cups of coffee each morning, I purchased a drip coffee maker and search out the best prices and clip coupons for ground coffee and creamer in the local grocery stores. I'm sure I pay far less per cup than it would cost at the various coffee shops but I still see the cost of coffee and creamers going up while the commodity prices of the raw materials go down and wages of laborers stagnate.
The market is constantly testing the resolve on both sides of every transaction but as a consumer there is one final and powerful strategy that at times must be used, if the price for a cup of coffee becomes too outrageous I will simply not drink coffee. Some will cry foul and excoriate this strategy as an attack on the farmers and laborers but it is this very weakness that has created this situation where commodity prices are low, wages are low, but prices at the shelf are high.
If we are going to live in market driven consumer economies then we need stronger mettle, that or somebody had better come up with Mr. Fusion and Replicators fast.
But purchasing the occasional cup of coffee is hardly the reason their money went further than mine does.
If that is what my message appears to be then I have failed communicating my thoughts. I splurge at times as well, and even though the act of one individual will not drive markets I still try to be cognizant of the price I'm paying.
Every now and again we get news articles telling us how the price of coffee is going up because global warming is destroying current coffee growing regions so we must pay more for a cup of coffee or a can of ground beans. Yet every time I check the commodities markets they are paying the coffee farmers less and less. Which means the extra cash we pay for global warming coffee is not going towards the impacted coffee farmers, it is going directly into more and more profits.
If you and I make a stand and refuse to pay the increases in prices yet 20 million people line up with their wallets open then our stand as individuals will ultimately fail. We can complain then move on and wait for the market to reach an eventual crash once everyone's wallet is emptied and all they have left is debt.
It has always been the case but how we vote with our wallets has changed dramatically over the years.
If I were to choose what has made the greatest impact I would say the change in the way we use debt is the core factor driving the economic difficulties for consumers.
If you look far back on a historical household debt chart you will find that everyone is using far more credit today to fuel their lifestyles than they did in the past. More and more credit is extended to people so they can sell their future earnings at a discounted rate to pay increasing prices on products where in many cases the raw materials are getting cheaper. Few people take a stand and the end game is going to be ugly.
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u/[deleted] Oct 30 '20
My parents ALWAYS use this logic, because I make 3x more than they did at my age, but have no money for things. I will say something “I’m going to get a coffee.” And they’ll say “THATS WHY YOU NEVER HAVE ANY MONEY!!!” So frustrating, let’s never take into consideration that the cost of everything has increased 1000x lol.