Posted on 07/18/2007 7:39:01 AM PDT by truthkeeper
Edited on 07/18/2007 8:06:58 AM PDT by Admin Moderator. [history]
Ding, ding, ding. We have a winnah!
>>“Perhaps the greatest crime in our education system is the lack of personal finance education.”
Agree 100%.
When I went away to college in the early 90s for my undergrad, the companies handed out credit cards like candy. I also came from a lower middle class family and had no clue about finances. I stupidly put my tuition on the credit cards. Not a good thing! I also stupidly got married right out of college to a “good Conservative” guy who refused to contribute more than $500/month to the family finances though he was making much more than that. (The rest went toward partying with his drunk friends.) So, I wasn’t able to save ANYTHING even though we made over 6 figures combined. Nowadays, I have no more than $500 on a credit card and it gets paid off every other month at most.
I’m 34, divorced, and make $45/hr doing IT consulting... but consider that I do not get benefits & contribute to my own IRA. I pay a ton in college loans (I just finished my Masters in Info Systems Management) BUT my Masters is a good investment. Nowadays with the offshoring in IT, you have to remain competitive & a Masters will help. It does not guarantee a job, but it makes you a stronger candidate. The couple in the story may be making only $80K because jobs in their field have disappeared and here they are holding Masters degrees that are useless.
Here in the Chicago area, you can’t live in a nice neighborhood that isn’t gang ridden and crime infested without spending at LEAST $160K on a house and that’s bare minimum. Apartments are about $900/month for a 1 bedroom. So, renting is stupid since you’re paying about what you’d pay for a house. You can also expect about 45 mins to 1:30 hrs for a daily commute one way & pay about $1.00 in tolls each day - $60/week in gas. I have a nice 2003 Buick Regal that I expect to have for a long time - paid for most of it with my divorce settlement, rest is financed.
In California, you are looking at paying over $500K to get in a decent neighborhood, and that would be a small condo.
If you want a house, you are looking at paying close to $800,000 for a small 3bedroom home.
We were lucky and bought a home 16 years ago for $320K. It was a 2200 sq ft 4 br fixer upper, and it worth around a million dollars now. A few years ago, we moved to a larger home. Our mortgage is around $500K.
The thing is that the people that bought our first home have a mortgage of over $800K. We have friends who have finally bought their first home, and their mortgage is going to be over $700K and their home is on a busy street and is much smaller than our first home.
I can’t imagine having over 3/4 million on a mortgage, and no equity. Heck, I don’t like our $500K mortgage, but we
also have almost a million in equity.
California is really a crazy place to live.
I like my car. It’s reliable, comfortable, and the interior is flexible — a station wagon with a pop-up seat in the rear, seat-belted for a total of 8 people (7 comfortably), and with both sets of back seats folded down, there’s room to stick a sofa in the back (which I have had occasion to do). And the AC is nice and cold. It’s the notion that this sort of car is “crappy”, and similar notions about houses, colleges, and weddings (one of the biggest financial sinkholes ever invented) that gets people started on the road to financial trouble.
well, it's almost twice the median income in this country ($46,326 in 2005).
“Spending habits don’t change with higher income.”
If you don’t spend much when you don’t have much, and that doesn’t change when you get more, what’s not to like?
Thing is, spending habits DO change when you have more to spend.
bad spending habits don’t change with higher income.
And, many people who acquire wealth by frugality don’t usually become big spenders later (unless they are retirees)
During our married life we bought one new car and had to turn it back to the dealer because everything went wrong with it. After that we always bought used cars and had better luck with them. A new car is one of the worst investments one can make. Recently, while listening to local news I heard of an elderly gentlemen who purchased a new car for himself. He drove it out of the showroom and went home - about five miles - and had a heart attack in his house. His family wanted to return the car and get full value, but were refused because the car was now “Used” so they got considerably less.
They also don’t get stolen. This model made the short list of cars least likely to get stolen, per insurance company stats. And any gangbanger thinking of doing a car-jacking would think twice about grabbing a car that he wouldn’t want to be seen driving, even for just a few minutes.
I’m not elderly, and had the same model for my previous car, so a total of over 10 years with this model. Regardless of the age of previous owners, or even whether they had teenage drivers in their household, this is not the sort of car that inspires rough driving. It tends to make one want to drive like a little old lady. And this prevents accidents and tickets, and in turn keeps liability insurance rates low. I pay a whopping $280 a year for liability insurance.
How much money do you have to make before its ok to buy a new car?
Obviously I could afford to buy one now, but I think it would be a very silly way to spend my money. Buying a new car is certainly not on my list of objectives for my life.
Cars invariably lose value over time. The more you spend on one, the more money you lose. I’m now contemplating buying my third house — other two are my primary residence and a “vacation” home fixer-upper out in a rural mountain area, where land is almost certain to appreciate significantly over the next 10 years. The third house would be an investment property for now, though I and some of my relatives would probably end up using it eventually (it’s in a small midwestern town where 4 generations of my family lived and are buried). It’s currently rented to a long term renter for nearly twice what my monthly mortgage+taxes+insurance would be.
Why would I want to spend my extra money on a more expensive car which will steadily lose value, when I could spend it on a house that will go up in value? I’ll eventually buy a newER car (though it will be at least 6 years old when I buy it, since 5 years is the limit for lower interest car loans, and the prices drop off fast when they’re no longer in the buy-on-credit market), but given that NEW cars lose a big chunk of value the minute you drive them off the dealer’s lot, I do not expect ever to buy one, even if my net worth is many millions. I prefer to let other people throw their money away on new cars, and thus ensure a steady supply of inexpensive cars for me to choose from.
Duh...do you think?
I like your way of thinking!
I have enough money to spend on a new car, also, and I drive a 1996. My taste is that of a Mercedes, (the looks, not the repairs/reliability), and I could afford it, but it’s against my principles.
My daughter is a millionaire and refuses to buy a new car....she buys used, but she’s building a house that will be worth several million dollars in a most desirable town. She’s also thinking of purchasing a “cabin” type home in the mountains.
That’s just crazy lol!
My worst problem is when I don’t get paid on time... that REALLY is not fun. Right now, my employer is not issuing checks for July until the end of the month. They called me on July 3 to tell me this. Normally, my paycheck is mailed 24 hrs after faxing in a timesheet on the 15th and 30th but they’ve been arriving later and later since the beginning of the year. Looks like I’ll need a new job soon :(
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