Two incomes, more debt?

Christian Science Monitor ^ | September 17, 2003 | Marilyn Gardner

[from occupied ga]

Unfortunately too many Americans are beginning to believe the government owes them, when in fact they need to understand the government is bleeding them dry.

What's unfortunate is that the people who believe that the "government" owes them are not the same people who the government is bleeding dry.

[sergeantdave]

Banks keep some of that money. Last report I saw said banks earned $60 billion in profits in year 2000 for moving around Xs and Os on the computers. Nice racket if you can get into it.

Of course a person can't simply open a bank without permission from the Club Fed.

[kitkat]

***But Ms. Warren, a law professor at Harvard, rejects the conventional theory that overconsumption - squandering money on big-screen TVs, McMansions, restaurant meals, oversized cars, and luxury vacations - is to blame for insolvency and all those maxed-out credit cards. ***

SIMPLE RULE of economics: The more money people make, the more they spend.

[ctlpdad]

If i grossed 3.5 million a year, i could seend all 4 of my daughters to private school and still do quite well, even after the confiscatory tax structure.

[holdmuhbeer]

Mrs. Dawgg and I have a combined paycheck of LESS than 29K a month!

Dude you're gonna get pounded for that typo. hehehehe

[holdmuhbeer]

Although i agree people have more than they should, tvs and dvd players are relatively cheap. they don't cause people to have debt problems. now cars on the other hand is a different story. also people tend to buy way too much house than they need. i think the 1600 sq foot house i live in is plenty for my family of four although my parents who should be older and wiser have given me hell about it and think i should live in at least 200 square feet. its funny how their child is wiser than they are in that aspect.

[holdmuhbeer]

Although i agree people have more than they should, tvs and dvd players are relatively cheap. they don't cause people to have debt problems. now cars on the other hand is a different story. also people tend to buy way too much house than they need. i think the 1600 sq foot house i live in is plenty for my family of four although my parents who should be older and wiser have given me hell about it and think i should live in at least 200 square feet. its funny how their child is wiser than they are in that aspect.

[FITZ]

It sold for 90,000. We now have a 2000 sq ft house that we bought for 161,000.

It amazes me --- the same house my dad bought new in the 1950s for $15,000 with a 15 year mortgate --- same wood, same neighborhood, same size now would sell for over $100,000. Something someone with a high school diploma, several kids, and living on one income could once afford would likely take two incomes now. I'd hate to guess the difference in property taxes and home insurance.

[VermiciousKnid]

I suspect it all depends upon where you live. Here on Long Island, $2900/month would barely pay for the cost of housing ALONE. For example, we own a 4BR Cape Cod house on 1/3 acre of land. When we purchased it, it cost $151,000 and the taxes were listed at $4200/year. It is a nice neighborhood, but by no means is it an exclusive or wealthy neighborhood. Seven years later, the house is worth about $400K (insanity; it is NOT that nice a house), and last year we paid $7,700 in propery (school) taxes.

Last June, our property (school) taxes went up 12.5%, which will bring our yearly tax bill up to nearly $9,000. Add that to the mortgage, and you're looking at $2,500/month in housing costs alone. And we haven't bought FOOD yet!

Forget new cars or vacations; we drive 'em till they fall apart and haven't been on a real vacation since the kids were born.

We do not use the local public schools at all, so we're getting stiffed there.

I HATE New York, and can't wait till we can escape.

Regards,

PS: I happen to agree with those other posters who advise living SLIGHTLY below your means (as we do). That little bit of wiggle room sure can come in handy if necessary.

[AD from SpringBay]

Unfortunately too many Americans are beginning to believe the government owes them, when in fact they need to understand the government is bleeding them dry.

AAAAAAAAAAAFREEPIN MEN! That thought ought to somehow become a ballot initiative that every adult in this country needs to go to a five-day tax education course during which people find out just how much of their earned dollars are going to some form of taxation and just what, exactly, those taxes are being spent on.

[proxy_user]

Actually, it's fairly easy to open a bank.

If you can raise five million in capital, you can do it. I've known some guys who've done it.

Unfortunately, if you're small your operational costs will be high relative to your revenue stream from credit. This is what kills small banks.

If you're successful, you usually get bought out by a larger bank.

[netmilsmom]

My house in the burbs of Cleveland was bought by my parents in 1961 for 18,000. I paid off the mortgage when they were both gone. My taxes were 1200 a year. Now we have basically the same house and pay 5000.00 a year in taxes (up 2000 since we moved in in 2000)and 1000.00 in insurance (up 400.00).
If life were perfect, I could find a job I could do at home while I stay with my three year old. I WON'T send her to daycare. Now we maintain and pray that life will improve.

[FITZ]

A lot of people don't understand that about property taxes ---- in some areas you really need that second income just to pay for those alone. Here even the small tiny houses have property taxes over $3000 a year. Plus one out of three wage earners makes exactly minimum wage, only one out of three makes over $10 an hour. The average person cannot afford a house and family on one income.

[FITZ]

And you're lucky you got your parents' house to live in --- imagine those couples having to save up for a down payment of several thousand dollars and come up with a new mortgage?

[biblewonk]

This is starting out very interesting, considering it's from a Ms!

[On the Road to Serfdom]

Dude you're gonna get pounded for that typo. hehehehe

and from your following post:

...and think i should live in at least 200 square feet

Your parents don't sound all that nice...

[dogbyte12]

The house my parents bought in 1974 for $23,000, now is "worth" $310,000 in Los Angeles. It at least resold for that amount that year. To show how nutty the housing market went in California, my parents bought in 74 for $23k, then sold just 7 years later for $89k in 1981.

You needed to make $2.87 an hour in 1973 working full time, to have a yearly salary that is 1/4 of the price of the home. You need a salary of $38.75 an hour working full time to do the same thing.

The house hasn't changed much, other than getting repainted several times. Still small, in a middle class neighborhood, but much less affordable.

People are always saying it's because of McMansions. Not here in Cali, or NY for that matter. You can literally be paying $5,000 a year in property taxes for a shack.

[PennsylvaniaMom]

Boy does this post hit close to home. I am currently taking classes, online--which I should be reviewing questions for instead of FReeping, but you know how that goes--to get my real estate license. PaDad and I have five kids--two now in college (so you know where our money goes). He works fulltime in engineering, I work parttime (eve. and weekends so that there is always one parent w/our three younger kids), and as I said retraining to be a realtor. As a second parttime job, I sometimes 'show' (babysit) open houses...mostly 'McMansions.' In depressed western Pennsylvania there is a building boom in 350,000 plus homes (and land is cheap here, low property taxes). There is, conversely, a glut of 350,000 plus homes being resold (finanaces gone bad). What amazes me, is going into a 300,000 homes, owned by a two income couple, usualy late 20s early 30s, that have basically no furniture (card tables and mattresses on the floor). Walk in pantries have neat top of the line appliances (wedding gifts?) but when you open the door to show the space it is usually devoid of food (always eating out?) It is like these people put every penny into their granite countered/marbled floor/cathedral ceilinged McMansion and live on nothing else...AND lendors are approving these loans--the debt/income ratios must be out the window for these folks to have gotten the credit needed to mortgage such an extravagent home.

[chris1]

Its a whole sham. In NY, for the sucker buyers of real estate, you have crazy title costs, lawyers, MORGTAGE TAX!, junk bank fees, etc etc. Its such a joke. Our parents NEVER had to deal with this stuff, let alone the fact that the house they bought for 15k now sells for 400k. Oh yeah, property taxes through the F'n roof.

[AdamSelene235]

That's why we elect Republicans. They will cut it back. Bush has proven that in his whooping tax cut.

Deficit spending is simply a delayed tax PLUS INTEREST. Bush has increased not decreased the fiscal burden of government via deficit spending.

Your statement is equivalent to saying "I didn't spend any money, I put it on my credit card!!"

duuuuuuhhhhh..