The only difference between a citizen and a serf is the right of ownership. This is the “freedom” people fought and died for. Welcome to Neo Feudal America where you will own nothing and you will be happy about it because complainers go to the gas chambers. Remember to go get your “Real ID” and passports because you are in the process of being tied to the land too.
Growing up, learning history, I always wondered how average people went from the freedoms of the citizens of Rome to feudal serfs barely more than slaves. I never thought I would get to learn first hand.
Americans would probably have a lot more freedom if they didn’t normalize getting into debt. You can save a lot of money if you never pay anyone interest.
Oh fuck off I missed owning a home because I was too afraid of debt. It’s impossible for most to save enough cash for a house outright especially with how insanely the prices inflate
The rapid inflation occurring right now is expected to slow down in the coming years. Over time it is highly probable you will catch up as long as you keep saving.
Can confirm, I only have a low rate mortgage and otherwise no debt. I bought my cars with cash, worked my way through school, etc, and I have a comfortable savings. We’re not rich, we just don’t piss away our money to interest.
Honestly, if you can avoid credit card interest and make an average income, you can probably afford a home by your 30s in most of the US.
I don’t think that’s even remotely the case for the vast majority of the workforce. It takes an incredible position of privelege to think otherwise.
For the average US citizen, they have a spare ~$200/month (see my comment history for context) the median US home price is $420,385 according to redfin. That means your closing costs (4%) + minimum down payment (3.5%) for an FHA loan would be (.075 * 420385) $31,528 which would take 157 months assuming you had no emergencies or extra expenses at all. Leaving you destitute to pay your mortgage on a home which will have inevitably increased in price since you started saving.
It’s a pipe dream for most US citizens, everyone has surprise expenses. People lose jobs, people buy things for leisure (what’s the point of living if you don’t?) Once they spend their 13 years of perfectly saved money to buy the average house, how do they afford the inevitable expenses? Save another 13 years to pay for another roof? Unfortunately now they have a mortgage which will be more expensive than their rent.
I assume the context you’re talking about is this article:
U.S. households’ average monthly expenses total $6,081
And then you estimate the income as being ~$6275 or so, hence your $200 extra number.
That figure seems to come from this study by BLS. Instead of taking that number at face value, let’s take a look and see where people are spending their money. The following is for a 4-person family unit, because that’s the default for the USDA food plans (dollar figures assume $6083 per month to expenses):
Housing - 31.6% - $1922
Transportation - 18.4% - $1119
Food - 12.9% - $785
Personal insurance and pensions - 14.1% - $858
Healthcare - 7.2% - $438
Entertainment - 4.7% - $286
Other - 11.2% - $681
What stands out to me is the insane amount of spending for transportation. Here’s what I estimate, assuming two cars and excluding acquisition costs:
insurance - I pay about $50-75/month for our older two cars with liability only insurance (YMMV by area and police record)
So let’s assume $300/month for both, that means people are spending ~$800/month on acquisition and maintenance. That’s nuts! Over 10 years, that’s ~$96k! You can buy a new car for $25-30k with a 10 year warranty, so something doesn’t add up. If you finance new cars, you’re usually forced to get comprehensive insurance, so not only are you paying a high finance charge (including interest), you’re also forced into a higher insurance payment.
My strategy is to buy quality older cars and keep them for 10 years or so. For example, I bought one car ~9 years ago for $10.5k w/ ~60k miles, and I’ve spend <$5k total (probably $2-3k, I DIY pretty much everything) on repairs and maintenance. But let’s say I actually spent $5k, that means my average monthly expense is ~$140 for acquisition and maintenance. Double that and I’m under the average expenses in a car by almost half ($300/month for insurance+gas and $300/month for acquisition and maintenance, so $600 vs ~$1100).
So just with that, we can increase the savings per month by $500, meaning $700/month saved. To get that $30k down payment would take ~4 years. That’s totally reasonable.
I think people on average just don’t know how to follow a budget, save money, etc. I really don’t think we have an income problem in the US (at least for the median household), we have an education and priorities problem.
If you have actual numbers for a household, I’d love to go through it because I’ve made a ton of assumptions here.
I think people on average just don’t know how to follow a budget, save money, etc. I really don’t think we have an income problem in the US (at least for the median household), we have an education and priorities problem.
Bingo. But people don’t want to hear that the problem is themselves, it’s far easier to complain about and blame other people.
I can point to plenty of extreme examples of rich people losing everything because of poor financial planning, such as lottery winners, sports stars, and trust fund kids. You can’t outearn a spending problem, and you can often outsave an income problem. Most millionaires are also frugal, and that is extremely interesting to me.
For example, my brother retired super early because he was extremely frugal, and now he lives on a pretty typical average income in terms of regular spending (though his house certainly isn’t typical). He’s a millionaire, but he lives on someone like $60k/year. Why? He doesn’t see value in spending more money, so he stopped working as soon as his savings growth outpaced his spending needs. He had a great job (actuary, eventually became VP), and he decided to retire at 40 after living in $50-60k/year or so and earning more than double that.
On the flip side, my cousin lives in a higher cost area than me and they’re in a single income household making a mediocre salary (social worker, so something like $70k in a higher cost area). They own a house and are on their way with retirement savings, and they do this while having four kids. Part of their plan is to live near family so they have free baby sitters, inexpensive vacation options, and someone to help with household projects. I’m guessing they spend about $50-60k/year just like my brother. They’ll probably work until normal retirement age and have a healthy retirement.
So I look at these examples and can’t help but think that money problems are often symptom of poor financial education or mismatched priorities, or both. Occasionally there’s a legitimate income problem, but if you’re making around an average income, it’s usually a budgeting problem.
I don’t disagree that spending less on transportation helps to save for a down payment. Finding inexpensive and reliable cars is not an easy task, but for people who were lucky, like myself, to find one it makes one chunk of the budget easier to stomach.
I own a home, so I’m not speaking from a place of woe is me, but from a position of empathy.
Don’t forget you have to qualify for your mortgage, even if you have a downpayment. Lenders will let you spend up to a max of 43% (and most far less than that) of your pretax income on your mortgage payment. If you’re the average household, 6275 * .43= $2698.25 monthly maximum payment. The average home price is $420,385 as we established earlier. Minus our down payment you could almost (but not quite) afford the loan with a PITI of 43%, the new payment would be around $2700/month with interest rates as they are today around 7.5%. But let’s say you are above average income wise for the sake of the narrative.
Oh shoot, $2700/month? That changes our household budget, now you’re spending at least an extra $800/month not including maintenance, utilities, and the many other expenses that come with home ownership. If you take that money out of your transportation budget you’re left with $300/month, hope you don’t have any surprise expenses! If your property taxes go up you have to give up something to afford it. Lose your job, lose your house. Paycheck to paycheck for the next 30 years, sounds like a nightmare to me.
On top of that affordability is getting worse, living expenses are rising, wages aren’t rising as quickly, the average person who didn’t luck into a home already will be less and less likely to afford one.
In my area, the average is right around $450k, so I think we’re pretty representative of the rest of the US. I did a quick search, and I saw a dozen or so listings for townhouse around $300-350k. If we look at the top end, with a 20% down payment ($70k), the mortgage+HOA is ~$2500/month. If we look at the bottom end, it’s ~$2300. I even see one as low as $2k/month. Note, this doesn’t include utilities or maintenance. So for an average household income of $6275, we’re looking at 30-37% of your income for the mortgage + HOA.
Rent for a similar place (2-3 bed, 2 bath) is $1500-2000. So it is currently cheaper to rent in terms of cash flow, but buying keeps your payment constant (inflation will be on your side) and builds equity, so longer term it should still be cheaper to own vs rent.
left with $300/month
Are you assuming a massive $800/month transportation budget or something?
Let’s assume $6275/month income, here’s a budget that I think makes sense:
mortgage + HOA - $2500/month (could save $200 or more buying a cheaper place)
food - assuming 4 person household with young kids (two under 5, which should be the target for these houses) - ~$900 (if you don’t have kids, it’s ~$550); this is the low cost food plan, not the “thrifty” food plan
transportation - ~$700/month; insurance ($50-100 in my area for two cars), gas ($100-150), maintenance/repairs (~$50/month), yearly registration ($100-150 in my area, so <$15/month); purchase price (assuming buying used and keeping for 10 years, a 2017 Corolla is ~$17k and a 2007 is ~$5k, so $1.2k/year or $100/month; add taxes and fees and assume ~$150/month on the high side)
utilities - ~$300/month; we spend a little more, but our house is larger than the ones i referenced (2400sq ft)
taxes without any retirement savings - ~$8000/year, or ~$670/month (my state is ~5%, federal is ~11% at this income, so 16% of $75k)
So, the major expenses come out to ~$5100/month. Add in another $500 or so for other stuff, and $5600 is a decent spending estimate. That leaves $600-700/month for savings, or 10-11%. Typical retirement savings goal is 10-15%, and that could be met by trimming some of these expenses by $200-250/monthn (a lot of that is taxes if going for pretax investments).
So yes, mortgage rates and property values certainly make things difficult, but I hope I’ve showed that it’s not as hopeless and many people assume. I think the average household could own a house and still save 10-15% of their pretax income. They’d need to drive older cars, but nothing unreasonable (5-15 years old; both of my cars are 15+ years old and have minimal maintenance costs).
Unfortunately, the average person seems to suck at budgeting, which is why I say it’s more often a budgeting problem instead of an income problem. The important thing is to establish good budgeting habits early, and then the focus should be on increasing income. Ideally, as your income rises, your spending doesn’t rise as quickly, so you end up with more cash flow as you get to the point where you want to invest in a house.
When I hear about middle class people struggling to pay the bills, I’m always curious what their lifestyle looks like and where they are spending their money. Literally today I saw a news article that broke down a family’s monthly expenses like this:
$1700 rent
$800 payment for two cars
$400 insurance
$250 phone
$60 internet
food paid for with whatever’s left
The big thing that stood out were the cars. They obviously bought some brand new cars that they couldn’t afford. If they sold those and replaced them with beaters their budget would be solved.
The worst part is, the news article was trying to paint this example as proof that the economy is ruined and only new laws can save us.
Who the fuck is paying $250/mo for their phones?? I literally pay $20/mo. Unlimited voice and text, 5gb data, and pay as you go past that. But I’m on WiFi almost all the time so I’ve never used a lot of data.
Or does that include the cost of buying a new phone? A new android phone is like $500 and lasts probably five years. Doesn’t add up
$250/month is just nuts! We pay like $30/month for two lines, though I could see up to $60/month for two lines being reasonable (unlimited data at Mint for two lines). We spend about $500 every 3 years or so for phones, so add in ~$30/month to save for that, round a bit for taxes, and you really shouldn’t be paying more than $100/month for two lines.
Insurance also seems high. We pay ~$50/month for two cars, though they’re older cars and we are in our 30s with clean records, so we’ve got that going for us.
So since I don’t have a car payment, have inexpensive insurance, and don’t pay out the nose for my phone, I save like $1400/month vs those numbers you quoted. So if the average person actually spends that much (I doubt it), by cutting out some unnecessary expenses, they could buy a house.
I’m not sure if this is really representative of everyone, but it’s telling that the news decided to use that example when trying to convince viewers the economy is bad. I’d love to see more research into middle class spending habits, as I suspect that predatory lending and consumerism cause problems more than inflation.
Agreed. For now, you can check out the BLS data here. The categories leave a lot to be desired, but I think it’s still interesting. Specifically, the amount people spend on transportation is terrifying, and that’s definitely on the “predatory lending” end of the spectrum.
We have clean driver records and paid off cars, and insuring 3 cars 4 drivers is running $900 a month for us here. That is car insurance alone, no car payment. Phone we do pay $200 but it’s covering 8 people, calls text unlimited data on 8 phones so if we made the kids pay could reduce that to about $50.
But your $50 car insurance is unusual. And not everyone can get a rate like that while simultaneously living close enough to work to manage the rest of the transportation expenses.
I don’t think it’s that unusual in my area. I’ve never paid more than $450 or so for 6-months of coverage on two cars, and I’ve been with multiple insurers. Granted, I get liability only, but comprehensive coverage isn’t that much more expensive (esp. on the older cars I drive). Something different is happening in Florida that isn’t happening here.
And I don’t live that close to work, my commute is ~25 miles each way. I live in the suburbs and work in the city.
The problem is there is inflation, high interest rates, house prices increasing rapidly, skyrocketing rent and wages staying stagnant. If you try to save money for 30 years in hopes of buying a home, it would be a difficult prospect currently. In my area, most of the friends that are renting are paying 2000+ in rent. I pay 1300 for my mortgage. If I had started saving when I bought my house, I still wouldn’t have enough and my house is now worth 3X what I paid for it. I don’t know where you are from but you clearly don’t understand the current situation in the US.
I didn’t have to do that 15 years ago. By your logic, 45 years from now people just have to accept living with 7 other people to be able to afford to someday buy a home. You’re are just moving the goal posts so you can continue blaming the people for a situation caused by corporations and the rich.
Ah but we did have to split rent 5 ways in the late 80s, just to barely get by. Nice that you didn’t have to but we did. The difference is that we knew it was possible to do better - used that time to go to school and get a degree that got me a different job and more money.
And technically even now, splitting the mortgage with husband. One income would not get close to covering the bills.
Arguing for social change should not keep one from offering advice on surviving the current situation and getting ahead. Roommates are a time honored way of getting by.
Last time I checked, you could try to make changes to society and save money at the same time. How much has posting on the internet blaming average people for their problems improved your life? Which do you think will improve your life more, arguing with someone over the internet or getting a second job with your extra time?
I agree, you can and should both save money and try to fix society. I offered you a suggestion to save money and you got mad because I forgot to add the obligatory “eat the rich” clause.
No you offered the old “kids these days could afford a house if they stopped going to Starbucks and eating avocado toast.” You aren’t addressing all the other problems. Saving money by itself won’t get you to a house anymore. That is the problem.
Yeah I was raised to understand debt is for three things: education (as an investment and treated as such), mortgages, and cars (though I avoid car loans where I can).
I’d take education and cars off that list. With the price of college where it’s at, if you can’t afford it on your own, I think you should look for alternatives like community college or online courses. It’s better to get education in things you’re not passionate about than to attend college and get saddled in crippling student debt that not even bankruptcy can save you from.
I’m also against paying interest on cars because a reliable used one is still cheap enough for most people to pay cash. Brand new cars should be seen as luxury items.
Idk my engineering degree is paying off as is my sister’s.
Cars can be bought on debt but shouldn’t stupidly be bought on debt. You buy a practical car with a strong down payment and a manageable interest rate. I don’t do that myself when I can help it, but as I see it I took a loan from my savings to buy my car because nobody offered a better interest rate.
Also I could buy heating aids on credit in this line of thought, but I once again choose to pay cash when possible.
Engineering is a degree with a practical application.
Those getting degrees in philosophy or art history aren’t practical.
Also people shouldn’t dismiss getting into the trades. Especially women. Right now there’s a shortage of good contractors. There’s good money to be made. You don’t need college for that.
That’s generally pretty true and also irrelevant to my point of it being worth it to go into debt to invest in education.
Additionally degrees in things like philosophy and art history can be valuable if you go in with a clear headed career path from them.
Trades absolutely shouldn’t be discarded. But the toll on the body should be weighed alongside it. You can make great money as a plumber while you’re still physically able. But if your knees hurt as an 18 year old, don’t try.
But if you want something NOW, instead of saving up for it, you take on debt. People don’t have as much patience it seems, than in years past. Also society has become more reliant on convenience (which costs more) and being lazy than taking the longer route (which costs less overall).
But that’s the freedom in it, right? The ability to choose the more convenient, fun route than the longer, saver route. An “ant vs grasshopper” fable in real life.
It also feels good to smoke cigarettes and eat cheeseburgers. And there has also been a big marketing push for those. I don’t necessarily think people are and more impulsive, but they’ve been led to believe debt isn’t as harmful as it actually is.
It is more complicated than it first seems. The inflation rate is controlled within the way debt is handled and it is a way to tie together the politics of nations in order to bring mutual benefit and stability. It is not anything like an individual’s debt to an institution. The rate of inflation balances against the debt in a way that makes it irrelevant in the grand scheme of things. Talking about debt like it is a bad thing in the world of today is a major form of populist manipulation for conservatives. The whole point and purpose of the GOP is to prevent reasonable legislation from having the opportunity to pass. This is what the billionaires are funding. It isn’t about liberalism or responsibility or any bullshit like that. The only purpose is to continue keeping all of the legal loopholes open for exploitation. The USA has a tenth of the laws and protections of any other western nation. This is why there are 750 billionaires and a major homeless problem with most Americans unable to own a home or even most of their property any more due to DRM/neo-digital-feudalism. The GOP is a circus show leading the nation around to one side show after another simply to prevent anyone else from taking the stage. They have no morals, there are no limits. When the focus shifts away from them, they instigate another ever more outrageous event where the outcome is already secured well in advance. This is all about distraction, from the budget, to stealing fundamental human rights from half the population, to massive open corruption by the supreme court, to rocket Karen fighting for Putin, to DeSatan or the orange usurper, to book burning, and defunding education, it is all just a distraction so that no reasonable legislation has the time or opportunity to pass. This is how 750 people robbed the country blind.
It requires that you provide a lot of documentation to get something that qualifies as a RealID. Multiple documents showing your full name, birth date, SSN, and proof of address. And if you can’t provide that paperwork, no ID for you, get fucked. Maybe that doesn’t seem like much, you just need the RealID to fly on planes, right? But if you can’t get an ID you can’t get hired. You can’t drive. You can’t rent a place. You can’t vote in a lot of places.
And then you get the ugly Catch 22 where you can’t get a RealID because you’re homeless and jobless, and you can’t get a home or job because you don’t have any ID.
My dad helped an old friend he knew who he found out hard been homeless for a while. And realized how you can be unpersoned. The old guy had no living family, no supporting documents to prove who he was and as such couldn’t get an ID. Which meant he couldn’t get a bank account, or a job that wasn’t cash under the table.
The only difference between a citizen and a serf is the right of ownership. This is the “freedom” people fought and died for. Welcome to Neo Feudal America where you will own nothing and you will be happy about it because complainers go to the gas chambers. Remember to go get your “Real ID” and passports because you are in the process of being tied to the land too.
Growing up, learning history, I always wondered how average people went from the freedoms of the citizens of Rome to feudal serfs barely more than slaves. I never thought I would get to learn first hand.
Americans would probably have a lot more freedom if they didn’t normalize getting into debt. You can save a lot of money if you never pay anyone interest.
Oh fuck off I missed owning a home because I was too afraid of debt. It’s impossible for most to save enough cash for a house outright especially with how insanely the prices inflate
The rapid inflation occurring right now is expected to slow down in the coming years. Over time it is highly probable you will catch up as long as you keep saving.
oh its supposed to slow down
I was told that in 06
Removed by mod
and like every other year
Can confirm, I only have a low rate mortgage and otherwise no debt. I bought my cars with cash, worked my way through school, etc, and I have a comfortable savings. We’re not rich, we just don’t piss away our money to interest.
Honestly, if you can avoid credit card interest and make an average income, you can probably afford a home by your 30s in most of the US.
I don’t think that’s even remotely the case for the vast majority of the workforce. It takes an incredible position of privelege to think otherwise.
For the average US citizen, they have a spare ~$200/month (see my comment history for context) the median US home price is $420,385 according to redfin. That means your closing costs (4%) + minimum down payment (3.5%) for an FHA loan would be (.075 * 420385) $31,528 which would take 157 months assuming you had no emergencies or extra expenses at all. Leaving you destitute to pay your mortgage on a home which will have inevitably increased in price since you started saving.
It’s a pipe dream for most US citizens, everyone has surprise expenses. People lose jobs, people buy things for leisure (what’s the point of living if you don’t?) Once they spend their 13 years of perfectly saved money to buy the average house, how do they afford the inevitable expenses? Save another 13 years to pay for another roof? Unfortunately now they have a mortgage which will be more expensive than their rent.
I assume the context you’re talking about is this article:
And then you estimate the income as being ~$6275 or so, hence your $200 extra number.
That figure seems to come from this study by BLS. Instead of taking that number at face value, let’s take a look and see where people are spending their money. The following is for a 4-person family unit, because that’s the default for the USDA food plans (dollar figures assume $6083 per month to expenses):
What stands out to me is the insane amount of spending for transportation. Here’s what I estimate, assuming two cars and excluding acquisition costs:
So let’s assume $300/month for both, that means people are spending ~$800/month on acquisition and maintenance. That’s nuts! Over 10 years, that’s ~$96k! You can buy a new car for $25-30k with a 10 year warranty, so something doesn’t add up. If you finance new cars, you’re usually forced to get comprehensive insurance, so not only are you paying a high finance charge (including interest), you’re also forced into a higher insurance payment.
My strategy is to buy quality older cars and keep them for 10 years or so. For example, I bought one car ~9 years ago for $10.5k w/ ~60k miles, and I’ve spend <$5k total (probably $2-3k, I DIY pretty much everything) on repairs and maintenance. But let’s say I actually spent $5k, that means my average monthly expense is ~$140 for acquisition and maintenance. Double that and I’m under the average expenses in a car by almost half ($300/month for insurance+gas and $300/month for acquisition and maintenance, so $600 vs ~$1100).
So just with that, we can increase the savings per month by $500, meaning $700/month saved. To get that $30k down payment would take ~4 years. That’s totally reasonable.
I think people on average just don’t know how to follow a budget, save money, etc. I really don’t think we have an income problem in the US (at least for the median household), we have an education and priorities problem.
If you have actual numbers for a household, I’d love to go through it because I’ve made a ton of assumptions here.
Bingo. But people don’t want to hear that the problem is themselves, it’s far easier to complain about and blame other people.
Exactly.
I can point to plenty of extreme examples of rich people losing everything because of poor financial planning, such as lottery winners, sports stars, and trust fund kids. You can’t outearn a spending problem, and you can often outsave an income problem. Most millionaires are also frugal, and that is extremely interesting to me.
For example, my brother retired super early because he was extremely frugal, and now he lives on a pretty typical average income in terms of regular spending (though his house certainly isn’t typical). He’s a millionaire, but he lives on someone like $60k/year. Why? He doesn’t see value in spending more money, so he stopped working as soon as his savings growth outpaced his spending needs. He had a great job (actuary, eventually became VP), and he decided to retire at 40 after living in $50-60k/year or so and earning more than double that.
On the flip side, my cousin lives in a higher cost area than me and they’re in a single income household making a mediocre salary (social worker, so something like $70k in a higher cost area). They own a house and are on their way with retirement savings, and they do this while having four kids. Part of their plan is to live near family so they have free baby sitters, inexpensive vacation options, and someone to help with household projects. I’m guessing they spend about $50-60k/year just like my brother. They’ll probably work until normal retirement age and have a healthy retirement.
So I look at these examples and can’t help but think that money problems are often symptom of poor financial education or mismatched priorities, or both. Occasionally there’s a legitimate income problem, but if you’re making around an average income, it’s usually a budgeting problem.
I don’t disagree that spending less on transportation helps to save for a down payment. Finding inexpensive and reliable cars is not an easy task, but for people who were lucky, like myself, to find one it makes one chunk of the budget easier to stomach.
I own a home, so I’m not speaking from a place of woe is me, but from a position of empathy.
Don’t forget you have to qualify for your mortgage, even if you have a downpayment. Lenders will let you spend up to a max of 43% (and most far less than that) of your pretax income on your mortgage payment. If you’re the average household, 6275 * .43= $2698.25 monthly maximum payment. The average home price is $420,385 as we established earlier. Minus our down payment you could almost (but not quite) afford the loan with a PITI of 43%, the new payment would be around $2700/month with interest rates as they are today around 7.5%. But let’s say you are above average income wise for the sake of the narrative.
Oh shoot, $2700/month? That changes our household budget, now you’re spending at least an extra $800/month not including maintenance, utilities, and the many other expenses that come with home ownership. If you take that money out of your transportation budget you’re left with $300/month, hope you don’t have any surprise expenses! If your property taxes go up you have to give up something to afford it. Lose your job, lose your house. Paycheck to paycheck for the next 30 years, sounds like a nightmare to me.
On top of that affordability is getting worse, living expenses are rising, wages aren’t rising as quickly, the average person who didn’t luck into a home already will be less and less likely to afford one.
In my area, the average is right around $450k, so I think we’re pretty representative of the rest of the US. I did a quick search, and I saw a dozen or so listings for townhouse around $300-350k. If we look at the top end, with a 20% down payment ($70k), the mortgage+HOA is ~$2500/month. If we look at the bottom end, it’s ~$2300. I even see one as low as $2k/month. Note, this doesn’t include utilities or maintenance. So for an average household income of $6275, we’re looking at 30-37% of your income for the mortgage + HOA.
Rent for a similar place (2-3 bed, 2 bath) is $1500-2000. So it is currently cheaper to rent in terms of cash flow, but buying keeps your payment constant (inflation will be on your side) and builds equity, so longer term it should still be cheaper to own vs rent.
Are you assuming a massive $800/month transportation budget or something?
Let’s assume $6275/month income, here’s a budget that I think makes sense:
So, the major expenses come out to ~$5100/month. Add in another $500 or so for other stuff, and $5600 is a decent spending estimate. That leaves $600-700/month for savings, or 10-11%. Typical retirement savings goal is 10-15%, and that could be met by trimming some of these expenses by $200-250/monthn (a lot of that is taxes if going for pretax investments).
So yes, mortgage rates and property values certainly make things difficult, but I hope I’ve showed that it’s not as hopeless and many people assume. I think the average household could own a house and still save 10-15% of their pretax income. They’d need to drive older cars, but nothing unreasonable (5-15 years old; both of my cars are 15+ years old and have minimal maintenance costs).
Unfortunately, the average person seems to suck at budgeting, which is why I say it’s more often a budgeting problem instead of an income problem. The important thing is to establish good budgeting habits early, and then the focus should be on increasing income. Ideally, as your income rises, your spending doesn’t rise as quickly, so you end up with more cash flow as you get to the point where you want to invest in a house.
When I hear about middle class people struggling to pay the bills, I’m always curious what their lifestyle looks like and where they are spending their money. Literally today I saw a news article that broke down a family’s monthly expenses like this:
$1700 rent
$800 payment for two cars
$400 insurance
$250 phone
$60 internet
food paid for with whatever’s left
The big thing that stood out were the cars. They obviously bought some brand new cars that they couldn’t afford. If they sold those and replaced them with beaters their budget would be solved.
The worst part is, the news article was trying to paint this example as proof that the economy is ruined and only new laws can save us.
Who the fuck is paying $250/mo for their phones?? I literally pay $20/mo. Unlimited voice and text, 5gb data, and pay as you go past that. But I’m on WiFi almost all the time so I’ve never used a lot of data.
Or does that include the cost of buying a new phone? A new android phone is like $500 and lasts probably five years. Doesn’t add up
I’m assuming they financed a flagship smartphone through the cell provider. Still a pointless waste of money
The phone also stands out.
$250/month is just nuts! We pay like $30/month for two lines, though I could see up to $60/month for two lines being reasonable (unlimited data at Mint for two lines). We spend about $500 every 3 years or so for phones, so add in ~$30/month to save for that, round a bit for taxes, and you really shouldn’t be paying more than $100/month for two lines.
Insurance also seems high. We pay ~$50/month for two cars, though they’re older cars and we are in our 30s with clean records, so we’ve got that going for us.
So since I don’t have a car payment, have inexpensive insurance, and don’t pay out the nose for my phone, I save like $1400/month vs those numbers you quoted. So if the average person actually spends that much (I doubt it), by cutting out some unnecessary expenses, they could buy a house.
I’m not sure if this is really representative of everyone, but it’s telling that the news decided to use that example when trying to convince viewers the economy is bad. I’d love to see more research into middle class spending habits, as I suspect that predatory lending and consumerism cause problems more than inflation.
Agreed. For now, you can check out the BLS data here. The categories leave a lot to be desired, but I think it’s still interesting. Specifically, the amount people spend on transportation is terrifying, and that’s definitely on the “predatory lending” end of the spectrum.
We have clean driver records and paid off cars, and insuring 3 cars 4 drivers is running $900 a month for us here. That is car insurance alone, no car payment. Phone we do pay $200 but it’s covering 8 people, calls text unlimited data on 8 phones so if we made the kids pay could reduce that to about $50.
But your $50 car insurance is unusual. And not everyone can get a rate like that while simultaneously living close enough to work to manage the rest of the transportation expenses.
I don’t think it’s that unusual in my area. I’ve never paid more than $450 or so for 6-months of coverage on two cars, and I’ve been with multiple insurers. Granted, I get liability only, but comprehensive coverage isn’t that much more expensive (esp. on the older cars I drive). Something different is happening in Florida that isn’t happening here.
And I don’t live that close to work, my commute is ~25 miles each way. I live in the suburbs and work in the city.
The problem is there is inflation, high interest rates, house prices increasing rapidly, skyrocketing rent and wages staying stagnant. If you try to save money for 30 years in hopes of buying a home, it would be a difficult prospect currently. In my area, most of the friends that are renting are paying 2000+ in rent. I pay 1300 for my mortgage. If I had started saving when I bought my house, I still wouldn’t have enough and my house is now worth 3X what I paid for it. I don’t know where you are from but you clearly don’t understand the current situation in the US.
Tell your friends to move in as roommates and instead of paying 2000 on rent, they pay 1000 each. Invest the difference.
I didn’t have to do that 15 years ago. By your logic, 45 years from now people just have to accept living with 7 other people to be able to afford to someday buy a home. You’re are just moving the goal posts so you can continue blaming the people for a situation caused by corporations and the rich.
Ah but we did have to split rent 5 ways in the late 80s, just to barely get by. Nice that you didn’t have to but we did. The difference is that we knew it was possible to do better - used that time to go to school and get a degree that got me a different job and more money.
And technically even now, splitting the mortgage with husband. One income would not get close to covering the bills.
Arguing for social change should not keep one from offering advice on surviving the current situation and getting ahead. Roommates are a time honored way of getting by.
Which do you think will improve your life more, blaming the rich and staying broke, or making a temporary sacrifice to save money?
Last time I checked, you could try to make changes to society and save money at the same time. How much has posting on the internet blaming average people for their problems improved your life? Which do you think will improve your life more, arguing with someone over the internet or getting a second job with your extra time?
I agree, you can and should both save money and try to fix society. I offered you a suggestion to save money and you got mad because I forgot to add the obligatory “eat the rich” clause.
No you offered the old “kids these days could afford a house if they stopped going to Starbucks and eating avocado toast.” You aren’t addressing all the other problems. Saving money by itself won’t get you to a house anymore. That is the problem.
Yeah I was raised to understand debt is for three things: education (as an investment and treated as such), mortgages, and cars (though I avoid car loans where I can).
I’d take education and cars off that list. With the price of college where it’s at, if you can’t afford it on your own, I think you should look for alternatives like community college or online courses. It’s better to get education in things you’re not passionate about than to attend college and get saddled in crippling student debt that not even bankruptcy can save you from.
I’m also against paying interest on cars because a reliable used one is still cheap enough for most people to pay cash. Brand new cars should be seen as luxury items.
Idk my engineering degree is paying off as is my sister’s.
Cars can be bought on debt but shouldn’t stupidly be bought on debt. You buy a practical car with a strong down payment and a manageable interest rate. I don’t do that myself when I can help it, but as I see it I took a loan from my savings to buy my car because nobody offered a better interest rate.
Also I could buy heating aids on credit in this line of thought, but I once again choose to pay cash when possible.
Engineering is a degree with a practical application.
Those getting degrees in philosophy or art history aren’t practical.
Also people shouldn’t dismiss getting into the trades. Especially women. Right now there’s a shortage of good contractors. There’s good money to be made. You don’t need college for that.
That’s generally pretty true and also irrelevant to my point of it being worth it to go into debt to invest in education.
Additionally degrees in things like philosophy and art history can be valuable if you go in with a clear headed career path from them.
Trades absolutely shouldn’t be discarded. But the toll on the body should be weighed alongside it. You can make great money as a plumber while you’re still physically able. But if your knees hurt as an 18 year old, don’t try.
But if you want something NOW, instead of saving up for it, you take on debt. People don’t have as much patience it seems, than in years past. Also society has become more reliant on convenience (which costs more) and being lazy than taking the longer route (which costs less overall).
But that’s the freedom in it, right? The ability to choose the more convenient, fun route than the longer, saver route. An “ant vs grasshopper” fable in real life.
It also feels good to smoke cigarettes and eat cheeseburgers. And there has also been a big marketing push for those. I don’t necessarily think people are and more impulsive, but they’ve been led to believe debt isn’t as harmful as it actually is.
Cigarettes are nasty.
Tell that to the average person living 50 years ago.
They were nasty 50 years ago and they’re nasty today.
You’re missing my point. Marketers convinced people they were good so they’d smoke more.
It is more complicated than it first seems. The inflation rate is controlled within the way debt is handled and it is a way to tie together the politics of nations in order to bring mutual benefit and stability. It is not anything like an individual’s debt to an institution. The rate of inflation balances against the debt in a way that makes it irrelevant in the grand scheme of things. Talking about debt like it is a bad thing in the world of today is a major form of populist manipulation for conservatives. The whole point and purpose of the GOP is to prevent reasonable legislation from having the opportunity to pass. This is what the billionaires are funding. It isn’t about liberalism or responsibility or any bullshit like that. The only purpose is to continue keeping all of the legal loopholes open for exploitation. The USA has a tenth of the laws and protections of any other western nation. This is why there are 750 billionaires and a major homeless problem with most Americans unable to own a home or even most of their property any more due to DRM/neo-digital-feudalism. The GOP is a circus show leading the nation around to one side show after another simply to prevent anyone else from taking the stage. They have no morals, there are no limits. When the focus shifts away from them, they instigate another ever more outrageous event where the outcome is already secured well in advance. This is all about distraction, from the budget, to stealing fundamental human rights from half the population, to massive open corruption by the supreme court, to rocket Karen fighting for Putin, to DeSatan or the orange usurper, to book burning, and defunding education, it is all just a distraction so that no reasonable legislation has the time or opportunity to pass. This is how 750 people robbed the country blind.
Nope. Serfs were forbidden from moving out of where they lived.
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Fuck real IDs
What’s wrong with them?
It requires that you provide a lot of documentation to get something that qualifies as a RealID. Multiple documents showing your full name, birth date, SSN, and proof of address. And if you can’t provide that paperwork, no ID for you, get fucked. Maybe that doesn’t seem like much, you just need the RealID to fly on planes, right? But if you can’t get an ID you can’t get hired. You can’t drive. You can’t rent a place. You can’t vote in a lot of places.
And then you get the ugly Catch 22 where you can’t get a RealID because you’re homeless and jobless, and you can’t get a home or job because you don’t have any ID.
My dad helped an old friend he knew who he found out hard been homeless for a while. And realized how you can be unpersoned. The old guy had no living family, no supporting documents to prove who he was and as such couldn’t get an ID. Which meant he couldn’t get a bank account, or a job that wasn’t cash under the table.