Expensive goods =/= Financial responsibility?

[Skunkwourk]

I keep reading articles about the increasing cost of goods due to shrinking margins but after a while, I started to wonder if that was a bad thing. Then again, I might be in the minority since depending on the item, I'd rather goto a mom & pop to support a local business than say Walmart for the lowest price.

Anyway, I know the standard answer Im going to get is "People are stupid", but will things getting expensive EVER lead to more financial responsibility for the average person or are people just unwilling to accept that they can't afford things and should save up. Seriously what will it take?

 

[shortylickens]

For the average American, it seems that inflation just leads them to acquiring more debt on home loans, car loans, and credit cards.

If they were a little more frugal the whole supply/demand equilibrium would balance out lower and we wouldnt have some of the ridiculous prices we do right now. The reason stores can charge more is because the average person is willing to spend more, even if they dont actually have the money.

Also, ≠

 

[Blackjack200]

There's a youtube video out there (posted by UCTV) of a talk given by a Harvard economist about the things Americans spend money on today. Turns out that, adjusted for inflation, they spend much less on food, clothing, and entertainment than any generation before them. But:

Spending on Housing? Through the Roof
Spending on Healthcare? Through the Roof

Also they have to spend more on transportation and childcare since both parents now work.

Of course, it's much easier to just blame Americans for being fat, lazy, and unable to manage money than it is to address these systemic problems. 🙄

Also, ≠

Keep your witchcraft out of this thread.

 

[IronWing]

Also, ≠

So do you actually know the keystrokes to produce that or do you just go find one on the web and copy/paste it each time you need it? Sort of like the © symbol?

 

[Blackjack200]

So do you actually know the keystrokes to produce that or do you just go find one on the web and copy/paste it each time you need it? Sort of like the © symbol?

Well for that one you can just type (c) into word and the auto-correct will give you the symbol.

 

[Wheezer]

There's a youtube video out there (posted by UCTV) of a talk given by a Harvard economist about the things Americans spend money on today. Turns out that, adjusted for inflation, they spend much less on food, clothing, and entertainment than any generation before them. But:

Spending on Housing? Through the Roof
Spending on Healthcare? Through the Roof

Also they have to spend more on transportation and childcare since both parents now work.

Of course, it's much easier to just blame Americans for being fat, lazy, and unable to manage money than it is to address these systemic problems. 🙄



Keep your witchcraft out of this thread.

hey, if the shoe fits.....

If your health care costs are going up....then WHY are you spending money on cigarettes, a new car, a new 360 or PS3 for your kid, weekly nights out to eat or drink at the bar rather than eating at home, spending money or broadband instead of going back to dial-up for 10/month, making sure you have the biggest flat screen your wall can support and the newest cell phone with all the bells and whistles along with a plan that costs you 60/ month or more........and for the love of god why the fuck are people still spending money on the shitty food at McDonald's, Burger king and Taco Bell?

All that is because people are fat, lazy, and unable to manage money.

 

[ShawnD1]

There's a youtube video out there (posted by UCTV) of a talk given by a Harvard economist about the things Americans spend money on today. Turns out that, adjusted for inflation, they spend much less on food, clothing, and entertainment than any generation before them. But:

Spending on Housing? Through the Roof

I remember John Stossel doing a report about this. One of his findings was that modern people pay more for houses because our houses are bigger than they have ever been in the past.

Modern houses are also much higher quality. 40 years ago, lots of houses only had a 60A electrical service. That's fucking terrible. A modern house will have closer to 100A service. Modern houses also have much better insulation and fireproofing.

 

[Blackjack200]

hey, if the shoe fits.....

If your health care costs are going up....then WHY are you spending money on cigarettes, a new car, a new 360 or PS3 for your kid, weekly nights out to eat or drink at the bar rather than eating at home, spending money or broadband instead of going back to dial-up for 10/month, making sure you have the biggest flat screen your wall can support and the newest cell phone with all the bells and whistles along with a plan that costs you 60/ month or more........and for the love of god why the fuck are people still spending money on the shitty food at McDonald's, Burger king and Taco Bell?

All that is because people are fat, lazy, and unable to manage money.

First of all, there are fewer smokers in America than probably anywhere else, so let's just table that one. As I posted before, Americans are buying cars because both parents need to work. Broadband, TVs and the cost of a PS3 or XBox is peanuts compared to what they're shelling out for housing, transportation, child care, and health care. Many people now use their cell phone as their only phone, and again, I bet when you compare it to what a land line used to cost (adjusted for inflation) it's cheaper.

I don't disagree that if you took away everthing not needed for survival, i.e. take away the cable, cell phone, air conditioning, heat, new clothes to replace worn out clothes, more people would be able to make it, but I don't fault Americans for falling behind when all they're trying to do is live the same lifestyle that their parents did.

 

[darkxshade]

buy now, regret later!

 

[Blackjack200]

I remember John Stossel doing a report about this. One of his findings was that modern people pay more for houses because our houses are bigger than they have ever been in the past.

Modern houses are also much higher quality. 40 years ago, lots of houses only had a 60A electrical service. That's fucking terrible. A modern house will have closer to 100A service. Modern houses also have much better insulation and fireproofing.

Honestly, I haven't taken a close enough look at housing to agree or disagree with this. But I do think John Stossel is a douche. There are also other things driving the housing problem like the idiotic tax deduction for mortgage interest which artificially inflates the demand for housing.

 

[Golgatha]

I don't fault Americans for falling behind when all they're trying to do is live the same lifestyle that their parents did.

I do. It took our parents 20-30 years to accumulate their current social status and financial independence. 20 somethings thinking they're entitled to live the same or better lifestyle than their parents currently do within 5 years of graduation is precisely the reason our country is in the shape it's in. If we all saved for a 20% down payment on a house and paid cash for depreciating capital expenditures (e.g. cars, appliances, computers, TV, etc.), we would certainly be much better off financially and most likely the divorce rate would be significantly lower as well.

 

[TheWart]

I do. It took our parents 20-30 years to accumulate their current social status and financial independence. 20 somethings thinking they're entitled to live the same or better lifestyle than their parents currently do within 5 years of graduation is precisely the reason our country is in the shape it's in. If we all saved for a 20% down payment on a house and paid cash for depreciating capital expenditures (e.g. cars, appliances, computers, TV, etc.), we would certainly be much better off financially and most likely the divorce rate would be significantly lower as well.

You might want to see how many "20 something's" were the ones taking out interest only ARM loans in CA and FL before you make such statements.

 

[Blackjack200]

I do. It took our parents 20-30 years to accumulate their current social status and financial independence. 20 somethings thinking they're entitled to live the same or better lifestyle than their parents currently do within 5 years of graduation is precisely the reason our country is in the shape it's in. If we all saved for a 20% down payment on a house and paid cash for depreciating capital expenditures (e.g. cars, appliances, computers, TV, etc.), we would certainly be much better off financially and most likely the divorce rate would be significantly lower as well.

Really? Most 20 somethings I know can't even afford to leave their parents basement. The rest of them rent. I'm the only person under 30 that I know that owns a house (less than 20% equity). By comparison, my father (a carpenter) left home when he was 18, did all kinds of cool jobs for 10 years (no college degree), lived in Egypt for a year, bought a house when he was 30 and had 3 kids. My mother didn't go back to work until my little brother was in high school.

It's a different world today. People buy Xboxs and PS3s to distract them from how shitty their lives are.

 

[IronWing]

People buy Xboxs and PS3s to distract them from how shitty their lives are.

I quoted that because it is so quotable. Well done!

 

[AyashiKaibutsu]

I do. It took our parents 20-30 years to accumulate their current social status and financial independence. 20 somethings thinking they're entitled to live the same or better lifestyle than their parents currently do within 5 years of graduation is precisely the reason our country is in the shape it's in. If we all saved for a 20% down payment on a house and paid cash for depreciating capital expenditures (e.g. cars, appliances, computers, TV, etc.), we would certainly be much better off financially and most likely the divorce rate would be significantly lower as well.

My father bought a very nice house in his 20s. He's in his 60s now (for timeframe purposes). I'll be lucky to beable to responsible own a house in my 40s.

 

[ShawnD1]

My father bought a very nice house in his 20s. He's in his 60s now (for timeframe purposes). I'll be lucky to beable to responsible own a house in my 40s.

Why not? I hijacked a thread in L&R where I conclusively showed that two people earning a modest $16/h each (ie wages at the world's shittiest job) could very very easily afford a $200,000 mortgage.

I'll just use some basic numbers on Royal Bank of Canada's website since it was the first google result. 10 year fixed term is 6.9% interest in Canada (rates are significantly lower than this in the US right now). In the mortgage calculator I will put it for a 200k loan, 6.9% fixed rate, 20 year mortgage, weekly payments. It comes down to rate of $19,864 per year for this. Can you and your wife afford 20k per year to buy a house? At the accelerated rate, it says this mortgage will actually end after 16.9 years instead of 20 due to the payments being weekly instead of monthly.

But hey this is ATOT where everyone earns 200k per year and drives a BMW. In fact, I only pay cash for my houses. Borrowing money is for retards!

 

[ebaycj]

Everyone earns 200k per year and drives a BMW. In fact, I only pay cash for my houses. Borrowing money is for retards!

fixed

 

[Wheezer]

Really? Most 20 somethings I know can't even afford to leave their parents basement. The rest of them rent. I'm the only person under 30 that I know that owns a house (less than 20% equity). By comparison, my father (a carpenter) left home when he was 18, did all kinds of cool jobs for 10 years (no college degree), lived in Egypt for a year, bought a house when he was 30 and had 3 kids. My mother didn't go back to work until my little brother was in high school.

It's a different world today. People buy Xboxs and PS3s to distract them from how shitty their lives are.

Well, then they are doing it wrong.

You don't deserve a $200,000 dollar house @ 20 and if you think you do then you are a spoiled brat that needs a good ass beating.

What your parents had, what your grandparents had did not fall from the fucking sky, they went out and earned it.

So instead of distracting yourself from your "shitty life" through some make believe world...get off your ass and change it.....don't wait for it to come to you.

 

[waggy]

I remember John Stossel doing a report about this. One of his findings was that modern people pay more for houses because our houses are bigger than they have ever been in the past.

Modern houses are also much higher quality. 40 years ago, lots of houses only had a 60A electrical service. That's fucking terrible. A modern house will have closer to 100A service. Modern houses also have much better insulation and fireproofing.

he was right. growing up with 4 sisters and my parents we didn't have a 5k sq/ft house even though my parents could easily afford it. we did each have a room but they were small. the house was not that big but worked fine.

Trying to find good newer "starter" homes is a pain (a 1300-1800 sq/ft). nobody is makeing them. seems all the newer homes being built are 3k+ and $300k+! wtf thats insane.

i do disagree that newer houses are always built better. I have owned both 100+ yr old house and a new build. while the old one did have outdated electrical and insulation (duh) it was built far better then any other house i have see. the damn thing was solid. new houses seem use cheaper stuff. its kinda hard to explain but it just felt cheaper.

 

[JEDI]

Why not? I hijacked a thread in L&R where I conclusively showed that two people earning a modest $16/h each (ie wages at the world's shittiest job) could very very easily afford a $200,000 mortgage.

I'll just use some basic numbers on Royal Bank of Canada's website since it was the first google result. 10 year fixed term is 6.9% interest in Canada (rates are significantly lower than this in the US right now). In the mortgage calculator I will put it for a 200k loan, 6.9% fixed rate, 20 year mortgage, weekly payments. It comes down to rate of $19,864 per year for this. Can you and your wife afford 20k per year to buy a house? At the accelerated rate, it says this mortgage will actually end after 16.9 years instead of 20 due to the payments being weekly instead of monthly.

But hey this is ATOT where everyone earns 200k per year and drives a BMW. In fact, I only pay cash for my houses. Borrowing money is for retards!

general rule of thumb for mortgages:
3x gross salary should be the max you get
banks will lend out 3.5x your salary

$16/hr per peron x 2 people = $32/hr = ~65k/yr

65 x 3 = 195k

Tada... $200k mortgage!

of couse that assumes no other debt (ie: credit card/car note)

 

[Blackjack200]

Well, then they are doing it wrong.

You don't deserve a $200,000 dollar house @ 20 and if you think you do then you are a spoiled brat that needs a good ass beating.

What your parents had, what your grandparents had did not fall from the fucking sky, they went out and earned it.

So instead of distracting yourself from your "shitty life" through some make believe world...get off your ass and change it.....don't wait for it to come to you.

It's not that people think they "deserve" a $200,000 house, it's that that's all there are. And they used to be $300,000.

Yeah, people really have the same kind of opportunity today that they did 50 years ago. 🙄

 

[jme5343]

LOL, I bought a house .75x my salary. I save a good deal each month and have no debt other than the house, but I would never even consider a home @ 3x my salary. My wife stays home with the kids and we pay cash for what we buy. We drive a used, but reliable van and I have a company car. We'd like to have a new living room set, but only when we save up will we buy it.

BUT, this was all after waking up a few years ago almost 50k in unsecured debt. I like this new feeling much better.

 

[Golgatha]

I have a mortgage that's around 2.5x my annual income, don't buy new and/or expensive vehicles, and save up to pay cash for wants like TVs. I also have a rainy day fund in case things like the air conditioner going out, car transmission needs replacing, etc happen; and they do and will happen.

IMO, someone without enough down to avoid PMI, and a mortgage payment which is 40% or more of their take home pay (this is assuming you have no other debt) should not be buying a house. Either rent or buy a lesser house to get your finances in line, then earn the right to buy the house you want.

If you think I'm f'ing nuts, I'll tell you it can be done. My wife and I rented a cheap 2 bedroom duplex while I was in grad school, paid off my school loans (luckily she was a full-ride scholarship student) while simultaneously putting back around $30k for a down payment on a future house, continued our habit of paying off our credit cards monthly (i.e. never carried a balance), drove our old cars (we were both fortunate that our parents both gave us a reliable used vehicle when we turned 16, but we paid cash for upgraded vehicles while we were both in college), and lived very meagerly for around 3 years from age 21 to 24. We purchased a 3 bedroom, 1250 sq ft house with 20% down when I was 25 years old. Over the next 6 years we managed to fully furnish this house with new furniture, which was paid for with saved up cash, and managed to build up nearly 35% of the home's original worth in equity. I'm now 32 years old and recently upgraded houses again to something I would describe as my personal dream house. We put 30% down in cash on this one without touching the equity in the old house. I'm going to use part of the proceeds from selling the old house in a couple of weeks to fund some network/surround sound wiring projects at the new house and buy a 55in LED-LCD HDTV I've been drooling over recently. The remainder will replenish our emergency fund and get invested for retirement in one form or another.

All of this was accomplished by living beneath our means, working our asses off, and not trying to buy a dream home/furniture/the latest greatest toys straight out of school (not to mention not getting into credit card debt while still in school). I still drive my wife's old 1998 Mercury Sable she bought in college (I'm also currently saving to be able to spend cash on a newer vehicle), and making that sacrifice (among others) was worth making everything I've described above possible; certainly much more satisfying than driving a brand new, leased BMW every day to work.

 

[DrPizza]

I have a mortgage that's around 2.5x my annual income, don't buy new and/or expensive vehicles, and save up to pay cash for wants like TVs. I also have a rainy day fund in case things like the air conditioner going out, car transmission needs replacing, etc happen; and they do and will happen.

IMO, someone without enough down to avoid PMI, and a mortgage payment which is 40% or more of their take home pay (this is assuming you have no other debt) should not be buying a house.* Either rent or buy a lesser house to get your finances in line, then earn the right to buy the house you want.

*Should not be buying THAT house. Banks willing to give out loans for 3.5 times someone's annual salary is one of the major factors influencing the spiraling costs of housing, and influencing the size of newly built houses. I also disagree that houses built today are necessarily built "better." But, there certainly are things that are better - earthquake resistance, insulation, electrical.

 

[Golgatha]

*Should not be buying THAT house. Banks willing to give out loans for 3.5 times someone's annual salary is one of the major factors influencing the spiraling costs of housing, and influencing the size of newly built houses. I also disagree that houses built today are necessarily built "better." But, there certainly are things that are better - earthquake resistance, insulation, electrical.

Yea, sorry, that's exactly what I meant. In summary...if you can't responsibly afford said house, you shouldn't be buying it.