Two incomes, more debt?

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

[Mad Dawgg]

arrghh, i meant 2000 square feet. LOL

NEENER! NEENER!

[texasbluebell]

It needs to be said over and over... live below your means. It brings you a lot more comfort and security than any new car or big screen TV.

It's one of the best ways to get ahead. Live well below your means.

Luckily I learned that and a lot more years ago, when reading a financial columnist named Humberto Cruz.

He came to the US from Cuba with his family when he was a teen, with only a few dollars in their pockets. Learned a lot from him.

link

[texasbluebell]

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.

Along those lines, the realtor we recently worked with said most loans these days are for 95% of the house price, downpayment of only 5%, even for $700,000 houses. People are living very close to the edge in that case.

[cardinal4]

Both my wife to be and I make good money, but we are barely surviving. I have tried to blame it on everything from the Clintons to the current economy. But the bottom line is financial irresponsibility is what put us in debt. We are in a major restructuring phase now. This involves cutting back on a lot of things that we thought were neccessary. We are learning the hard way that the extravagances we enjoyed 2 and 3 years ago, like weekend trips, rental cars, hotels, etc. Are just not conducive in the current economy. After our marriage,(Oct 11 '03), it will probably get worse. As much as I would like to blame someone else, it is our fault we got into debt. And it will require some discomfort to get out of it. Sound familiar? We liken our fiscal situation to the US Govts.

[Mad Dawgg]

"It's one of the best ways to get ahead. Live well below your means.

Luckily I learned that and a lot more years ago, when reading a financial columnist named Humberto Cruz."

I learned it from this book.

[Mad Dawgg]

"College is a farce today because these kids come out learning and knowing nothing helpful in terms of employment. It is another transfer of wealth to the elites."

"If you want a degree, go to college. If you want an education, go to the library." --- Paul Henry Gettles

[secks]

Men working in the construction trades can expect to top out at about $50k/year (thanks to unions). That's after working for awhile. Don't forget the hazardous working conditions. So, no .. they aren't making "far more than college grads".

[texasbluebell]

Thanks for the tip on that book. Will get a copy to give to someone who can benefit from the advice.

[tdadams]

He does have some good advice. I especially liked the article about how little changes in spending add up to a lot. I've always had this mindset, but about a year ago, I challenged my sister to start looking at things that way. It's amazing how things have turned around for her. She went from being behind on all her bills and having no savings, to having a few thousand in the bank. And that's with a very meager income.

[texasbluebell]

If you don't already do this, I found it to be extrememly useful years ago. Have money automatically deducted from your paycheck into an IRA or even savings account. You'll never miss it though it seems strange to say that if the money is tight right now.

It's mentioned in one of the Cruz columns linked in #82, the one for Sept. 10.

We did that and it's amazing how the money builds up, and you just adjust to having less available to spend.

Another tip from Cruz that I remember well--when you get a raise, never use it, just have your monthly deductions increase into your IRA, pretend you never got the raise as far as your spending goes.

[texasbluebell]

I always enjoyed his columns so much, yes, he often has advice like that.

And when my newspaper stopped carrying his column, I dropped the newspaper. Saved me $30 a month!

(And now he can be found on the web anyway.)

[hopespringseternal]

The arrival of two children added more expenses. "Babies are money-eating machines," she says. "They need so much."

Kids are cheap, unless you hire someone else to raise them. They don't eat much, and their discretionary spending is entirely under your control. Diapers are moderately expensive, unless you go cloth.

College is expensive, but weighed against never being born getting loans or learning a trade isn't so bad. Who says life is worthless without a B.S. degree?

I suspect that two incomes usually ends up being more of peoples' problems than they realize.

[hopespringseternal]

Another tip from Cruz that I remember well--when you get a raise, never use it, just have your monthly deductions increase into your IRA, pretend you never got the raise as far as your spending goes.

This is smart because when taxes go up or you wind up with a new bill each month, you have reserve income to handle it.

[cardinal4]

Thanks for the tip. We are exploring a similar option at our bank.

[Prolifeconservative]

My son tells me all the time how sad it is to see these highly degreed kids go and become waiters as restaurants upon graduation.

Just for the simple sake of a financial arguement, who comes out better in this scenario: the doctor who spent 12 years of his life choosing to be educated instead of earning, incurring 100,000 dollars of debt in the process, but eventually getting an enormous salary OR the guy who finishes high school, learns his trade, goes into a drywall business, proceeds prudently in all areas of his life as far as finances?

I have my suspicions who trumps who in this make believe scenario, but will keep my opinions to myself so as not to offend those highly educated indiviuduals who think they are triumphant over that little guy who has contracted to pave his driveway.

[quack]

I suspect that two incomes usually ends up being more of peoples' problems than they realize.

I'll let you know in a few months.:)We're expecting our second child in December and my wife is going to quit her job around March of next year and stay at home.I can't imagine going through the things we do now with just one child and multiplying it times 2.Just not having to worry about the scheduling problems that arise when she's out of school alone will be worth it.

[John O]

For most families, children ARE the problem.

While I agree with most of what you wrote I still disagree with this. Look at most dual income no kids couples and you'll see people in exactly the same financial condition. They are broke at a higher level but they are still broke. They spend too much and save too little. They have allowed their debts and possessions to own them and now they are trapped in the two earner cycle.

My point is that if people live responsibly then children are not that much of a burden. I have a two (and a half she will always add) year old and she doesn't cost much more than what I and my wife spend anyway.

Children are not the problem. Fiscal irresponsibility is the problem

[chris1]

You are right for those who are employees. I am talking about friends of mine who started their own "blue collar" businesses.

[Tax-chick]

"Babies are money-eating machines," she says. "They need so much."

What a bunch of cr*p. Babies are milk-eating machines - guess what, moms produce it for free! Except for diapers, babies cost nothing (if you had health insurance). People will give you all the clothes and other items you could want ... but then these people are probably the type who has to have everything new, and not from Wal-Mart, either.

[biblewonk]

My wife and 8 kids and I sure do well on my 50k income. We were never in the big house and SUV competition and are way ahead now. We are debt free and saving lots of money.