Dealing with the Cost of Living...

[2180]

Since I made my post on this subject last night, I started getting self-concious about it and started thinking about some way to not make people get rid of their credit cards and such, though I didn't propose that at all.

 

Capitalism is a sorta-miracle if it's not abused - thus, I say believe in credit and your capacity to have-it!

 

One way you can think of it is, think of the "bell curve" and then imagining that as a wave you are surfing on -left-to-right. and then imagine that you are just over the edge to the right surfing the economy, that is where everyone wants to be.

 

That is where all profitable companies and solvent people are.......now the problem, is how big is that wave, it looks like a bubble, why because it is! It's in all terms, the "wealth" of a community, like the USA, now the crushing reality - the big corps are laying-off manufacturing jobs and it hits everywhere, because there isn't money to support, what was once a valuable MONETARY UNIT.

 

They can't pay you enough monetary units to keep you employed because the units have NO VALUE.

 

This is getting convoluted so I'll post tomorrow if this thread is still "hot". I can say that Lee has a really nice house and what she has would probably cost 300, 000 pesos in Austin!!

[epiegols]

Ernest,

 

Sounds like you are already doing most of the things you can do.

All I can say is buying a home is really your best bet. $900k sounds like its too much for you right now, so consider moving out farther (this is what I had to do to get the big place). You may find the public schools out there acceptable and find a neighborhood where you can raise your kids. The tax deduction for mortgage interest and the principal you pay on the mortgage are huge advantages in the long run, not to mention the equity from appreciation. If it can't be done in your area no matter where you look, consider Texas as others have mentioned.

 

My brother just bought a $175k place in Austin. .5 acres, 4 bedrooms, new home. The neighborhood has sidewalks and looks really upscale. Austin is happening for music and cheap! Good IT scene too.

 

If you really can't see yourself moving no matter what, then it seems you are willing to take on debt to live near your families. You just have to live with your decision that this is the cost of that arrangment.

 

If I were in your situation, I would move to Austin and buy house, save up for down payment on a place back in NY and then move back when the kids are past their formative years and you have some money to buy a place. Austin is on its way up and NY, San Fran, DC, LA have all reached a point where housing isnt going to make 20% annual gains anymore (IMHO). Short term sacrifice for long term stability. Stressed out parents can make things bad for the kids at home and hardship in the marriage.

 

Does this all suck? Yes. Beats living in a third world country though.

[kevinnem]

Originally posted by Hanshananigan Thanks Kevin! It took me a minute, but figured it out eventually!

 

hey I noticed that a second page in there has some stuff in it, .. but the problem is that the funace effecentcy is not used in there, I would suspect that the better yoru funace is the LESS an effect that changeing the temperate has (as an absolute value.. relitive will stay the same)

 

 

 

Anyway, I am likeing the thread great idea for a topic.

[kevinnem]

 

Originally posted by epiegols Ernest, Short term sacrifice for long term stability. Stressed out parents.

 

 

I find this to be a hard pill to swallow (I know you where talking about the specific sitation, but I would bet a lot of use are in this situ)

 

 

 

How many people here could honestly get out of debt, and be living a lot bettter life, if they just went balls to the wall - make money, don't spend any 2 jobs ect.... for 2 years.

 

I know that I would, if I have the guts to do it, I could have my comission as a alberta land survey in 18 months. a year and a half- then I would be making a min of 75K/year, and within 5 years, over 100K. BUT for some reason I just can't bring myself to get it done. it feels so far away , it is hard to motivead to start walking (crawling?) toward that goal. All this after 2 years in teh office, and 5 years, in engineering school.

 

SO yea? what do you guys think about teh "bite teh bullet and get it done" idea. Or do you find that "short term pain for long term gain" just turns in to a lot of "short term pain, for more short term pain"

 

Kev.

 

eagearly awaiting YOUR thoughts!

[epiegols]

 

Originally posted by kevinnem SO yea? what do you guys think about teh "bite teh bullet and get it done" idea. Or do you find that "short term pain for long term gain" just turns in to a lot of "short term pain, for more short term pain" Kev. eagearly awaiting YOUR thoughts!

 

 

Kev,

 

I actually meant that comment in a different way. In Ernest's case, the sacrifice would be to move away from the area he really wants to be in and live in a place with a low cost of living where he could get by with just one job, live in a nice neighborhood and save some money. This would make life less stressful and possibly prevent hard times with the family.

 

Although, if biting the bullet means going to school and sucking it up to lay the foundation for a career, then I agree with that. However, once you have a family, nothing is more important then that, and when money problems begin, that really takes away from the family, because money is one of the biggest reasons for family strife.

[Jimbroni]

 

SO yea? what do you guys think about teh "bite teh bullet and get it done" idea. Or do you find that "short term pain for long term gain" just turns in to a lot of "short term pain, for more short term pain"

 

 

Well my viewpoint is if aren't enjoying your life right now, I'm not sure how sacrificing to improve your credit situation will help.

 

IMO, Over indulgence is a reaction to a life that is unfulfilled, and ultimately causes more unhappiness. This could even lead to addiction to consumer products. Plenty already are. There is a reason Target is doing so well.

 

Follow the middle way.

 

Heed some of the excellent advice in this thread and don't fret about it, is all I can say.

 

Its kinda like a diet, if you go over board with the cutbacks, you'll probably relapse into an even worse position.

[philbo]

 

Originally posted by jackcheez Some of us like to think and maybe talk about it first. Thanks for the lecture anyways.

 

 

Sorry, didn't intend a lecture.... I thought I was just presenting the facts as I see them... Maybe that's what a lecture is about?

[MoreGuitars]

I live in Orange County, CA, and unfortunately the stereotypes are true. Our housing cost's are tremendous, my home I bought 8 years ago is valued at about 1.2 million. A real estate agent recently told me that some new home owners are paying about $6,000 a month between mortgage and taxes, thats crazy! Still, Mercedes, BMW's, Jaguars, Range Rovers seem to be in every garage. Fake money is everywhere.....

 

But, I have resisted. My wife and me view cars as just means of transportation, so we drive Toyota's and Honda's. I do not have an interest bearing loan except my mortgage, which I re-fied to a 15 year 3 years ago. I look forward to the day I am free and clear.

 

My luxury is music gear, which I do spend a lot on, but I only pay cash. I am lucky to make a good salary so that helps, but I would never want to start over again and have to pay the mortgage rates today. It would kill me.

[the stranger]

Should have called it the "cost of survival" thread. I call it slavery.

 

Is that political?

[Ernest Buckley]

I`m afraid that once you move out of NYC, its going to be almost impossible to buy yourself back in. Even the worst neighborhoods in Brooklyn (East New York) where houses are slightly larger than a two car garage are going for aroun $300,000. I know in South Jersey that could get me a 5 bedroom and a 1/2 acre of land and a good school system.

 

As a REALTOR, I see prices coming down a bit with the interest rates starting to budge upwards. I just started my new career and it is only a matter of time before I do own a home but it does seem awfully expense and ratio wise compared to what previous generations were paying to own a home, I would say its safe to say that today we are paying close to 10x what our parents paid.

 

The American Dream is long gone in many areas of this country. Parents both work these days and kids are often left to fend for themselves. I can`t see doing that to my two kids and that is why my wife and I have decided it is best that she stay home with them until they go to school full time. Then she will return to her career as an educator as well.

 

Ernest

[crawdad]

I WISH I had a good answer. Unfortunately, everything seems to be getting more expensive: housing, energy, health care, food. Salaries don't seem to be escalating and corporations are doing everything they can to shed the burden of paying benefits, pensions and health care, not to mention slashing jobs.

 

The post WWII boom which led to the expansion of the middle class is over. We have moved from a national to a global economy and our standard of living is spiraling downward. Expect it to be on level par with many less wealthy nations in the near future. And, as previously mentioned, we have turned into a nation that is driven by materialism, yet the gulf between the haves and have-nots increases every year.

 

If you want to be on the "winning" side of all this, you have to figure out where all the money IS being made--for there are fortunes being made daily. Maybe its a job with a health provider or an oil company or a big real estate brokerage. I don't know. (I make my living as a musician...talk about unstable career!)

 

This whole work until you drop ethic is insane to me. Europeans take six weeks of vacation a year. Americans don't. Makes me wonder what the point of life is if all we do is work. What about the quality of life? Time with friends and family? Time spent reading, regenerating ourselves spiritually and physically? Are we all heading for the endless treadmill as the years of our lives slip away?

 

To me, the American Dream is about living a FULL life. Work is just one part of that. However, the economic squeeze we are facing is making people work more, not less. I don't know where its all going.

 

I do think that if we are going to try and find any semblance of the American Dream, we have to begin to think globally. I know a guy who makes effect pedals in his house and he sells them all over the world. Small overhead. He's doing what he loves and he's making a good living. I agree with specialized education too. The more you know, the better off you will be.

 

Personally, if I were in NYC or So Cal and I didn't have the wherewithal to get a house and afford it, I would go somewhere else. A million for a three bedroom ranch is ridiculous when you can get that same house for under $200,000 elsewhere.

 

Somebody will make a fortune finding a way to stretch the budgets of all of us who will struggle to have affordable housing, food, energy and health coverage. There are options and there are strategies that haven't even been thought of yet. For every problem there is a solution. Somebody's going to do it.

 

I admit that I'm just scratching the surface and that the multitude of simultaneous problems we face is not being addressed at all with all this. Thanks for letting me think out loud.

[Ernest Buckley]

I don`t want to get bleak but I believe that histroy has proven that once the gap between the haves and the have nots get too large, it leads to a revolution of some sort. That usually wipes the slate clean and people have to look out for each other more which in turns works out for everyone in the beginning but then greed comes along and things start to get tricky again.

 

I know this topic can take on the shape of a very long book but I`m looking for ideas and also just want to know I`m not alone.

 

If it were up to me, I would move my entire family to Utah or something. Also, isn`t it legal to have something like 7 wives there?

 

That would definitely help my stress level lower.

 

[the stranger]

[franknputer]

Y'know, there's a lot of good stuff here - but I have to take issue with anyone who thinks it's simply a matter of giving up your luxuries to get even.

 

I notice that a lot of people commenting here don't seem to have kids - and that changes a lot. I don't mean having to buy Ninteno & expensive sneakers - we don't do that. But, kids cost money.

 

Ever price kids' clothes? They cost as much or more as adult clothes. (We buy secondhand everything, hand them down, trade with other parents...).

 

When I was single & poor, I simply didn't go to the doctor unless I had to. Kids need checkups & vaccinations, or you can't get them in school. Live in a bad area? Have done it, plenty of times - but I won't subject my kids to that if I can do anything about it, because of safety, poor educational opportunities, etc.

 

Our house is modest, but we need 4 bedrooms - so right there we end up in a different bracket. Slim pickings at the $150k level...and my mortgage takes up between 45 and 50% of my take-home, since we had no down payment cash at moving time (being unemployed ate up what little I did have). I've thought about buying cheaper, but there are several other factors, like added commute time (more gas $, wear on my 10-yr. old car), schools (low $ area = lower tax base = crappier schools)...

 

I have some credit card debt that I've been carrying for years now, started at a time when my wife was working full-time - but then the stork came & she had to quit. We've always overpaid the minimum - yet somehow, it barely whittles away at the balance, & I've handed one company thousands in interest while still having thousands in debt...some of it was frivilous, sure, but other things were dental & medical - not always the kind of thing one can go without.

 

We hardly go out, we don't drink, don't have a lot of fancy toys - most of my gear acquisitions have been scavenged leftovers that would end up in the dumpster, that I put up with the quirks.

 

I could go on, but why? Point is, it IS difficult to get/stay afloat, even actively pursuing it. There are a lot of factors arrayed against the individual these days, and it's not fair to simply write it all off as some kind of personal failure. We've managed to remove a lot of debt, but there is still a lot there, and it's a real bitch knowing that your family is one severe crisis away from disaster.

[sventvkg]

Yea, ya know we follow the way of life that is set up for us..Like having to work ALL the time and having to pay exorbitant costs for housing, and then they spend trillions of dollars advertizing to us the crap they want us to buy so as to brainwashing us into complete materialism..Life is about living it and enjoying it and it's painfully short...My solution was to identify all the pitfalls and I've basically checked out of it all...I'm not going to work my entire life away and slave so I have no time, or energy to do anything I'm passionate about or go where I want to go...My time on earth is short and I'm doing what I want to do with it...This means I'll have a lot less $$ then the workahaulic but I enjoy everyday and I can pursue my art...I WILL NOT BE HOUSE POOR trapped in some crappy job 50 hours a week just to make a mortage payment and slowly dying....

 

Checking out of our way of life is very difficult but can be done and the rewards are a much less stressful life where you have time to stop and smelll the roses so to speak.....I have ZERO desire for plasma screeens,

Mercedes', Big over-inflated mortgage, etc......All the material crap is there for people who are basically miserable inside to try to make them feel good about working their entire lives away and letting their dreams die....

 

To the original poster on this board.....There is no solution if you choose to live where you are...You either buy into the whole Materialism work till you drop and rarely vacation mentality or move....There are no other choices if you want to stay in NY...Your parents are only there because they have been there before all the insanity hit....They would never have been able to affor to live there if they were just starting out or coming up like you are....It's your ball.....I personally would skate the hell out of that area..I was just up in NJ for 5 months and it SUCKED!!! That whole way of life....You can keep it!

 

 

Originally posted by crawdad I WISH I had a good answer. Unfortunately, everything seems to be getting more expensive: housing, energy, health care, food. Salaries don't seem to be escalating and corporations are doing everything they can to shed the burden of paying benefits, pensions and health care, not to mention slashing jobs. The post WWII boom which led to the expansion of the middle class is over. We have moved from a national to a global economy and our standard of living is spiraling downward. Expect it to be on level par with many less wealthy nations in the near future. And, as previously mentioned, we have turned into a nation that is driven by materialism, yet the gulf between the haves and have-nots increases every year. If you want to be on the "winning" side of all this, you have to figure out where all the money IS being made--for there are fortunes being made daily. Maybe its a job with a health provider or an oil company or a big real estate brokerage. I don't know. (I make my living as a musician...talk about unstable career!) This whole work until you drop ethic is insane to me. Europeans take six weeks of vacation a year. Americans don't. Makes me wonder what the point of life is if all we do is work. What about the quality of life? Time with friends and family? Time spent reading, regenerating ourselves spiritually and physically? Are we all heading for the endless treadmill as the years of our lives slip away? To me, the American Dream is about living a FULL life. Work is just one part of that. However, the economic squeeze we are facing is making people work more, not less. I don't know where its all going. I do think that if we are going to try and find any semblance of the American Dream, we have to begin to think globally. I know a guy who makes effect pedals in his house and he sells them all over the world. Small overhead. He's doing what he loves and he's making a good living. I agree with specialized education too. The more you know, the better off you will be. Personally, if I were in NYC or So Cal and I didn't have the wherewithal to get a house and afford it, I would go somewhere else. A million for a three bedroom ranch is ridiculous when you can get that same house for under $200,000 elsewhere. Somebody will make a fortune finding a way to stretch the budgets of all of us who will struggle to have affordable housing, food, energy and health coverage. There are options and there are strategies that haven't even been thought of yet. For every problem there is a solution. Somebody's going to do it. I admit that I'm just scratching the surface and that the multitude of simultaneous problems we face is not being addressed at all with all this. Thanks for letting me think out loud.

 

[patshep]

why do you need two cars in brooklyn, that seems wrong

[Philter]

Hey Ernest,

 

I understand the desire to live near family, but consider this: are you willing to subject your children to the NYC metro lifestyle by choosing to remain there yourself?

 

Maybe you will be the generation to do the right thing and get out of there. Upstate NY, CT, whatever, there is a better way of life, within visiting distance to NYC, and maybe the future generations of your family will look back and appreciate the relocation.

 

Just my 2 cents as someone who recently fled the NYC metro.

[Lee Knight]

Originally posted by Ernest Buckley If it were up to me, I would move my entire family to Utah or something. Also, isn`t it legal to have something like 7 wives there? That would definitely help my stress level lower.

 

I think you've got that one backwards.

[John Sayers]

great thread

 

here in aussieland it's exactly the same. Housing prices have escalated over the past 10 or so years. Around 6 years ago I was renting a house for 145/wk and it was on the market for 160K - today that same house is worth over 1mil. because it is on the beachfront.

 

I see two major causes for this.

 

1. the baby boomers laying down investments for retirement - that means buying a house and paying it off with the rental payments. Consequently all my friends have had to leave where they were living and move to a cheaper neighbourhood and all those expensive rental properties are sitting vacant because no one can afford them.

 

2. The high divorce rate - almost 60% of baby boomers are separated and require 2 homes when normally they would have only needed one.

 

I think we are slightly ahead of you as our housing boom started before yours. The high price of Sydney housing (think LA or NY)gave the boomers the opportunity to sell up and move to the coast where they have been buying up everything and causing a rapid boom in prices in those areas.

 

On the other hand Sydney house prices dropped 10% this year and are still falling. Interest rates are steady at the moment but if they were to go up by 1% or more there will be a lot of people who will be in trouble as they are so tightly financed now and could end up with their cost of housing outweighing the value of the house.

 

I'm noticing that the cost of housing in my area, once a boom area, has gone past the boom and is now also dropping.

 

I suspect the US will experience a similar situation very soon.

 

cheers

john

[Mr. Donovan]

John Sayers, I know the East Coast of Aussie Land is the most densely populated, but what about the West Coast, North Coast, and South Coast? That's a lot of beachfront property! Can I have some?

 

I wish I could take some of that coast line with me and bring it back to Iowa.

[John Sayers]

yeah - we have the most beaches of any country 7000 I think it is

 

Just like in the US the outer cities, Perth, Darwin etc are also experiencing housing booms and prices are still going up even though Sydney/Melbourne are now dropping..

 

the main move has been to the north and south coasts on the eastern seaboard. A lot of the coast is actually locked up in national parks.

 

Mind you - if you want to live in the desert you can still pick up a weatherboard home for $60K in Broken Hill!!

 

cheers

john

[Mr. Donovan]

Cool. I think it's a good thing that a lot of the coast is preserved in National Parks.

[John Sayers]

so do I.

[Ernest Buckley]

 

Hey Ernest, I understand the desire to live near family, but consider this: are you willing to subject your children to the NYC metro lifestyle by choosing to remain there yourself?

 

 

Right now our oldest son who is 3 is attending a Montessorri school. Yeah its expensive but as ot turns out, most of the kids who graduate from there end up in the advanced public school classes where they are basically out of the way of Special Ed kids. So we are willing to pay the price now rather than later.

 

I actually agree that moving out of Brooklyn would be best in the long run, however my wife is unwilling to do so. I love having family close but I am much more willing to leave than she.

 

 

Maybe you will be the generation to do the right thing and get out of there. Upstate NY, CT, whatever, there is a better way of life, within visiting distance to NYC, and maybe the future generations of your family will look back and appreciate the relocation.

 

 

Yes, I actually was offered jobs in South Carolina, South Jersey twice and Rockland County which is no longer cheap. I did not take any of those jobs because they were not paying enough for us to purchase a home there on my salary alone. That seems to be the irony of this whole thing. Here I am looking to move out and my wife would be too IF I could get a job that would pay enough for her to stay home with the boys until they go to school FT.

 

The position I have now happens to be very cake as they say and I make more than most directors in my position but it is nowhere near enough to purchase here.

 

 

Just my 2 cents as someone who recently fled the NYC metro.

 

 

I appreciate the thoughts. I am always on the lookout for something but I believe that my career in Real Estate will take off eventually to the point where we can afford to purchase where we want to.

 

Sadly, the CEO of my Real Estate company passed this week at the age of 69. This man started out as a sales agent and grew his company into Brooklyns largest Family Owned Realty but he never enjoyed completely the years of hard work.

 

I find his life to be inspiring except the fact that he was still working behind a desk.

 

Ernest

[cereal]

 

Originally posted by John Sayers I think we are slightly ahead of you as our housing boom started before yours. The high price of Sydney housing (think LA or NY)gave the boomers the opportunity to sell up and move to the coast where they have been buying up everything and causing a rapid boom in prices in those areas. On the other hand Sydney house prices dropped 10% this year and are still falling. Interest rates are steady at the moment but if they were to go up by 1% or more there will be a lot of people who will be in trouble as they are so tightly financed now and could end up with their cost of housing outweighing the value of the house. I'm noticing that the cost of housing in my area, once a boom area, has gone past the boom and is now also dropping. I suspect the US will experience a similar situation very soon. cheers john

 

 

john is right. i agree that we will be (currently are?) looking at a similar situation here in the US. here's a re-post from a blog that i lurk in:

 

"Just great comments all around;

 

What we know (indisputable facts):

 

1) Massive acceleration in housing prices in SOME locations over the last 5 years

2) Substantial decline in affordability using traditional criteria in SOME locations over the last 5 years (really same as 1)

3) General expectation that upward trend will continue (may be changing now)

4) "Innovative" loan products which enable borrowers to obtain substantially more in loan proceeds than in the past.

5) New thinking (and acting) that residential real estate (your own home) is an "investment"

6) Disconnection from historical norms between cash flow from rentals and purchase of real estate.

7) Substantial purchase of residential real estate for investment purposes (actual quantity is unknown)

 

What may happen:

 

1) Investors no longer believe that prices will continue to go up; leave certain markets (and prices look like Wile E. Coyote running off of the cliff after the Roadrunner)

2) Interest rates increase, resulting in increased carrying costs of investments

3) "Sticky" prices aren't so sticky; if an individual has substantial equity in a house and is living in it, probably hesitate to sell below value. But investors may bail quickly, leading to a quick reduction in prices

4) Chain reaction -- Pain in certain speculative areas (e.g. Reno, Bakersfield, Phoenix, etc) leads to pain in stable areas.

 

So there are a few ideas. Now what do I think -- in some speculative areas prices will start coming down quickly by mid-Summer. You may actually get some "fire sale" level prices. Then the virus will spread, and the mess occurs.

 

Anyone who thinks of 10-15% decline(nominal)will be all and REALLY wants to buy a house to live in for some time should just buy now. After all, 10% decline from peak is only roughly 1/2 of last year of appreciation.

 

A reversion to the mean would result in a 45-60% drop in many areas off of peak prices. (e.g. a 200K in 2001 house is 600k in 2005; inflation about 20% over the last 5 years -- puts FMV @ $240k -- 60% off peak). In some areas, houses may just be free for the taking (or the back taxes).

 

Well, sorry for the long rant -- but decline from peak of 20-40% in somewhat bubbly areas and 40-60% in the really bubbly areas in the next 12-30 months. That's my story and I'm sticking to it.

 

Best to all who post and lurk."