Carol in Cal. Posted April 20, 2016 Share Posted April 20, 2016 . I think many people don't see a reason to save anymore, because there are often programs to help people out. I have a friend who divorced and was so desperate for money, that she went around to churches begging for funds for housing and food for her kids, What a lot of reasonably well off people don't realize is how expensive these emergency, short term fixes are compared to a 'smoothed' lifestyle. Case in point: A few weeks ago a lady (let's call her Susan) got up at church at the end of the service and announced that a young woman (34) with an infant that had just been released from the hospital because she had been premature and in the NICU were homeless. The woman had been living with her brother, but he had kicked her out because the baby was too loud. So Susan asked for help. She had taken the lady and the baby to a motel and paid for a few nights' stay while they involved a social worker and tried to find her a placement. People lined up after church to give her all the cash they could come up with, and others went and shopped for food and diapers on their credit cards to help out. It was nice the way it worked out; everyone prayed, many gave, the motel expenses were paid for for about two weeks and there was enough food to get by that whole time, then a one month homeless placement was found, thank God. (sidenote: It would have been much easier to find an immediate homeless placement if the woman had been abused or was addicted or an alcoholic. It was really touch and go whether she would get placed at all, and when this month is up it's hard to imagine that she will not be homeless again.) My point: the motel was a dive, but this is an expensive area so the dive cost $90 per day, equivalent to $2700/month for just a room with a bathroom. So to get enough money to stay in this inferior setting would take a lot more hustle than staying in a stable placement. When you're poor around here, everything is like that. You can't buy in bulk because you have nowhere to go with the goods, so you have to pay much higher unit costs for food and supplies. You can't get a job in the next town because your transportation is unreliable, and if you have to fall back on uber you will go broke. Bottom line: It's expensive to be poor, in ways that are hard to imagine. 15 Quote Link to comment Share on other sites More sharing options...
Dad 4 Boys Posted April 20, 2016 Share Posted April 20, 2016 But the fact that everyone went through it may explain why there are now so many people with so little savings. I mean, not everyone, obviously, but on average it has probably had a huge effect on the savings rate in the general population. There were a significant number of people who did have to sell in that time period. Or who just lost their houses outright. I was trying to address the original comment of not being as smug as they once had been. I think if you had a good plan in place that worked for you and didn't need to sell your home or retire in this time frame, you were able to ride out the 2008 downturn without it being catastrophic. If you look at it from this perspective, I think you can be content (i.e. smug) with your plan, then and now despite the losses in value of your home and retirement savings. The downturn most definitely affected the finances, including retirement planning, of millions and millions of people, me included, by stifling growth for several years. I'm sure there are people out there that made the right moves and avoided the losses that the majority of us took, but I bet they are a small minority. As to the overall tone of the article and this thread, the obvious key is to live within your means and don't make financial choices with the sole purposes of showing off or keeping up with someone else, who could very well be on the brink of financial disaster without you knowing it. It would make no sense to go over the cliff with them just because they're going. 3 Quote Link to comment Share on other sites More sharing options...
happypamama Posted April 20, 2016 Share Posted April 20, 2016 Yep. DH needs a new car. We can't get him a Dave Ramsey beater car because that absolutely negatively impact his career. We'll be fine but we weren't in this same situation at the beginning of his career. Not to mention that the Dave Ramsey beater car risks breaking down, leading to costly tow bills and repairs. Sometimes it's better to have a guaranteed car payment, knowing that it's likely a reliable vehicle. My beater minivan was all well and good, nice not having a car payment, until it left me stranded too many times, and with expensive repair bills. 19 Quote Link to comment Share on other sites More sharing options...
Ravin Posted April 20, 2016 Share Posted April 20, 2016 What a lot of reasonably well off people don't realize is how expensive these emergency, short term fixes are compared to a 'smoothed' lifestyle. Case in point: A few weeks ago a lady (let's call her Susan) got up at church at the end of the service and announced that a young woman (34) with an infant that had just been released from the hospital because she had been premature and in the NICU were homeless. The woman had been living with her brother, but he had kicked her out because the baby was too loud. So Susan asked for help. She had taken the lady and the baby to a motel and paid for a few nights' stay while they involved a social worker and tried to find her a placement. People lined up after church to give her all the cash they could come up with, and others went and shopped for food and diapers on their credit cards to help out. It was nice the way it worked out; everyone prayed, many gave, the motel expenses were paid for for about two weeks and there was enough food to get by that whole time, then a one month homeless placement was found, thank God. (sidenote: It would have been much easier to find an immediate homeless placement if the woman had been abused or was addicted or an alcoholic. It was really touch and go whether she would get placed at all, and when this month is up it's hard to imagine that she will not be homeless again.) My point: the motel was a dive, but this is an expensive area so the dive cost $90 per day, equivalent to $2700/month for just a room with a bathroom. So to get enough money to stay in this inferior setting would take a lot more hustle than staying in a stable placement. When you're poor around here, everything is like that. You can't buy in bulk because you have nowhere to go with the goods, so you have to pay much higher unit costs for food and supplies. You can't get a job in the next town because your transportation is unreliable, and if you have to fall back on uber you will go broke. Bottom line: It's expensive to be poor, in ways that are hard to imagine. Having recently moved from "poor" to "lower middle class", I'm still reeling from the realities of how broke we still are, and looking back wondering how we limped along as long as we did with as little as we did while living off my student loans. A couple of things I've noticed: 1. I had to buy a reliable car on short notice to get to my job. Because my credit is meh, so is the loan for my car, and that car payment is a significant chunk of money. 2. We in some ways had better health care on medicaid, even though we have "good" insurance, because we have little wiggle room in our budget and can't afford doctor bills, the OT DD had been getting, etc. 3. We ate better when we had food stamps, because we got a reasonable amount and you can't spend SNAP on anything but food. Now, I have to choose between groceries and other bills. 4. I came out of law school with absolutely no available credit. Especially after the car loan, we are maxed to the nines, and every time it looks like I might be able to get a little ahead of the credit card bill, something comes up (doctor, car repair, work travel that I get reimbursed for weeks or months later, being forced to move because the landlord won't renew the lease, etc.) and it's maxed again. We should be getting an income tax return sometime soon, which will enable us to catch up and maybe get a bit ahead of the bills...but I'm not holding my breath for it. In the mean time, things that we had to do without entirely, such as visiting family, for years, we are going back to doing, because with no end in sight, if we "buckle down" and not go anywhere or do anything or buy anything for the sake of paying off debt, we'll probably still be in exactly the same position five years from now either way, though maybe with a house of our own. 9 Quote Link to comment Share on other sites More sharing options...
marbel Posted April 20, 2016 Share Posted April 20, 2016 Not to mention that the Dave Ramsey beater car risks breaking down, leading to costly tow bills and repairs. Sometimes it's better to have a guaranteed car payment, knowing that it's likely a reliable vehicle. My beater minivan was all well and good, nice not having a car payment, until it left me stranded too many times, and with expensive repair bills. Yeah, I don't get the beater car mentality. I mean, if it's all someone can afford, that's one thing. But really it can get to the point that it is more expensive because of repair bills, and an unreliable car can impact people getting to work. We had a car that was getting unreliable. We were trying to keep it going to avoid the pain of buying something new. Finally we had to. When we got the new car, I realized how stressed out I had been every time I got behind the wheel of the other car. Would I get the kids to school that day? To their doctor appointment? Forget about driving somewhere we didn't need to go. Stress can have a real cost too. I feel for anyone who has to drive an aging, unreliable car, and I can't imagine why anyone recommends driving one as a good financial strategy. 16 Quote Link to comment Share on other sites More sharing options...
SKL Posted April 20, 2016 Share Posted April 20, 2016 (edited) I don't know that I'd generalize that low-income people naturally think that way, but I have definitely seen it when people have an opportunity to do something they thought they'd never be able to do, and won't ever get to do. Example: Where I live, going to Disney (FL) is very popular. I guess it's popular everywhere but it's a typical winter or spring break thing here. Say a family has never been able to afford it, but they want to. They come into some money, say a small inheritance or a tax refund. They think "we should save this" (or pay off bills, whatever) but their kids are getting older, and opportunities to travel with them as a family are dwindling. So they take that money and go to Disney. Maybe they go into a little debt to do it - the windfall doesn't cover the whole thing. But, now they've done this thing they've been wanting to do for years. Were they wrong to spend that money having this great experience with their kids, instead of saving for retirement that may never come anyway, or paying off bills they can keep chipping away at for years? (I don't know if I can answer that question.) If it was just one trip to Disney, I could kind of understand it, even though my first trip to DW was when I was around 30. Even saving up for years to go to Disney I could understand. Nobody became poor just because of a once-in-a-lifetime trip to Disney. But spending money like it's gonna burn a hole in one's pocket is a different thing. I have relatives who took their kids to Disney World multiple times (from a northern state) despite always crying that they were poor. That I don't understand. They also did a bunch of home remodels while complaining about money. Come time to send teens to college, and there is not one dollar saved. Edited April 20, 2016 by SKL 5 Quote Link to comment Share on other sites More sharing options...
Garga Posted April 20, 2016 Share Posted April 20, 2016 Yeah, I don't get the beater car mentality. I mean, if it's all someone can afford, that's one thing. But really it can get to the point that it is more expensive because of repair bills, and an unreliable car can impact people getting to work. We had a car that was getting unreliable. We were trying to keep it going to avoid the pain of buying something new. Finally we had to. When we got the new car, I realized how stressed out I had been every time I got behind the wheel of the other car. Would I get the kids to school that day? To their doctor appointment? Forget about driving somewhere we didn't need to go. Stress can have a real cost too. I feel for anyone who has to drive an aging, unreliable car, and I can't imagine why anyone recommends driving one as a good financial strategy. Yup. We keep our cars until they're about to die and it would cost more to repair than to buy a new-used car. Last time we had to buy new cars, all three cars were on the brink of death at the same time. What a mess! One of them broke down on the side of the road on the way to the dealer for a new car. We had three cars because our 2 regular cars were so often ready to die that we had a 3rd car that my inlaws gave to us as a backup. It was also about to die, but we hoped that they wouldn't all die at the same time. We hoped that at least 1 would be running enough to get dh to work. This went on for about a year until all three of them were just too old and too unreliable. It's always a balance at the end of a car's life--how much money do I put into repairs before I need to stop repairing and put that money toward something new? Beater cars aren't really an answer. They might be a stop gap for a short time, but if the beater has a problem before you can ditch it, then you're out thousands of dollars. I have friends who seem to have so much stuff. They buy a new house and then buy all new furniture and doo-dads to decorate it. They redo the siding and windows, etc. I have friends who throw extravagant parties and buy expensive food and go on vacations. And I think, "What in the world do they make?? DH isn't making peanuts and there's no way we can afford all that!" I have a feeling they're deep in debt. Well, one friend I know is deep in medical debt and she's at the point where it will take their entire lives to pay it off. They don't want to live in drudgery for the next 40 years, so they let the debt stay, pay it off very slowly, and then spend a bunch of money on fun stuff. She almost died in her 20s (the medical bills) and said it taught her to enjoy life while you have it because it can be gone in an instant. It's so complicated. 6 Quote Link to comment Share on other sites More sharing options...
myfunnybunch Posted April 20, 2016 Share Posted April 20, 2016 I get a bit annoyed by the people who congratulate themselves for how well they have managed their money while not "keeping up with the Joneses". It really doesn't take much to put you into debt and into a shaky position. We are pretty frugal and at one time we had a healthy savings/investment and little debt. We have never had cable TV, dh's car is 14 years old and has rolled over miles, my kids don't wear new or expensive clothes, gifts are practical, we haven't taken a vacation in years and before that our vacations were camping trips, we all get our hair cut at a cheap walk-in place, our furniture is 15+ years old and has holes in it, we rarely eat out, our TVs are 15 years old, I took the kids to a movie theater this year for the first time in 5 years. We do spend money on some kids activities and homeschool materials, but otherwise we're pretty frugal. When the economy took a dive, our investments (not aggressive at all!) lost a huge amount of value and we hoped we could ride it out and recoup some of it. Instead, my dh lost his job and because of his field and age, it took him FOUR YEARS to find anything beyond very low wage temporary jobs with no benefits or time off. My education and background is the same as his, so I couldn't be much help. We considered selling our house and moving, but houses were practically being given away at that time in our neighborhood and we have adult children and elderly parents in this area. We ended up having to take the rest of the investment money out just to pay basic bills and when everything (refrigerator, washing machine, car) starting breaking and dh had an injury that put him out of work for a few weeks, we put repairs and medical bills on credit cards. Now we are in debt and it's going to take us a while to dig out. There's NO money to put in savings. We need to put every spare cent to debt reduction right now. Hugs. I get what you're saying. And I think there's a difference between getting into debt over spending to keep up, and getting into debt because of life circumstances beyond your control, like job loss or medical expenses. Many of the issues detailed in the article were problems that could have been solved in other ways: State universities, moving to a lower col area, different job choices. I'm not even criticizing the choices that the article's author made, just pointing out that the family did have other choices. The article was illuminating for me not because I feel self-congratulatory over living comparatively modestly, but because I am genuinely baffled that we seem to be making a decent income but....where does the money go? For us, much of it it goes into savings and paying all of our bills without carrying debt so that if we face similar challenges, we've got some cushion. But because people don't really talk about their debt, I had forgotten/not considered that some of the folks around us who are carrying two car payments and a home improvement loan and have a weekly housekeeper might not have any savings. Or they might. None of my business, really. I was just trying to figure out why my family seems to have relatively less when it comes to resources that we can spend at will. 8 Quote Link to comment Share on other sites More sharing options...
Katy Posted April 20, 2016 Share Posted April 20, 2016 tHinking about the bit I bolded - it strikes me this is true of the poor, but not so true of those who start rich. I don't follow you. If someone with a high income doesn't live within their means they still end up poor. This is why professional football players with multi-million dollar contracts frequently declare bankruptcy within a few years. More money isn't the answer because money is always limited. Wants are always unlimited. Obviously if you don't have enough money to meet basic needs you need to do something more lucrative. But if you have enough to meet needs and are just living outside your means, you're making poor choices. Yeah, I don't get the beater car mentality. I mean, if it's all someone can afford, that's one thing. But really it can get to the point that it is more expensive because of repair bills, and an unreliable car can impact people getting to work. We had a car that was getting unreliable. We were trying to keep it going to avoid the pain of buying something new. Finally we had to. When we got the new car, I realized how stressed out I had been every time I got behind the wheel of the other car. Would I get the kids to school that day? To their doctor appointment? Forget about driving somewhere we didn't need to go. Stress can have a real cost too. I feel for anyone who has to drive an aging, unreliable car, and I can't imagine why anyone recommends driving one as a good financial strategy. Dave Ramsey doesn't recommend a true beater. He recommends buying a reliable ($6-10k) used car in decent condition and planning for maintenance. When it starts breaking down repeatedly and maintenance costs more than car payments, do whatever you need to, but don't overspend on something flashy. If you must get a loan, do so, but make it a low one and pay it off as soon as possible, and continue to put that amount in savings so you can get a newer but used car with cash when you need to. But the most important factor is always the safety and security of your family. I've heard him say that on his radio show when someone absolutely needed a vehicle for work and their current one was broken down beyond repair. 9 Quote Link to comment Share on other sites More sharing options...
Garga Posted April 20, 2016 Share Posted April 20, 2016 (edited) I have friends who went to Disney. They took their kids and grandkids. They paid for everything--tickets, plane, hotel. They even paid to take all the kids and grandkids to a very expensive restaurant for a single meal---a steak house. They paid $1,000 for that one meal. GASP. I cannot imagine that. I cannot imagine paying $1000 for a meal. They justified it entirely, "Well, it was a once in a lifetime experience! We're getting older and wanted to do something with the family." I just don't understand thinking that in order to have good memories and to spend time with family you have to spend $1000 on a meal. It's their money and they can do what they want with it, but it is completely different from how I live. Just a total 180. To create memories with the grandkids, my parents bought 2 bags of water balloons and had a water balloon fight with the kids in the backyard. My kids loooooved it. That's the way I was raised--you find a way to enjoy life on the cheap. I have made a note to create a personal finance class for my sons in high school. We've been teaching the kids things naturally as they come up in our lives, but I definatey want to take a good chunk of time and teach this deliberately. Maybe a 1/4 credit class over a summer break. Edited April 20, 2016 by Garga 7 Quote Link to comment Share on other sites More sharing options...
Liza Q Posted April 20, 2016 Share Posted April 20, 2016 Like the author of the article did, we own a co-op in a Brooklyn neighborhood with lousy schools. For quite a while we considered selling and moving up/out to somewhere cheaper to live but it can be very difficult to sell a co-op that is not in a great neighborhood. So I am trying to be sympathetic to him. But I am not succeeding! Maybe it is because I have little patience for those who move here to be cool. My husband and I are native nyers (children/grandchildren of immigrants) and my husband is a cop so we can't move very far. But in general I really do feel for families who find themselves unable to come up with $400. for an emergency. We were there 15 years ago. A terrible situation (when our son died we had to borrow money from my brothers for the funeral because our only savings were not liquid and would have been wiped out anyway. we paid them back when we got the insurance money) scared us and we started to save aggressively. Not that we were living above our means - we had no credit card debt - but we lived as well as we could afford and thought that we were saving as much as we could. Five years later we went to Disney World and paid cash after we had saved a good amount of money for emergencies. Since then we've paid off our mortgage (admittedly not a big one), bought a van with cash, taken several trips to Disney World, helped our older kids with college, and still have several month's worth of expenses saved. My husband got a promotion and worked many hours, we were more frugal - it has been worth it. It breaks my heart that there are many who are so discouraged that they don't think it is worth trying! If we had been in credit card debt, we wouldn't have gone on vacations, but we would still be ahead. 5 Quote Link to comment Share on other sites More sharing options...
G5052 Posted April 20, 2016 Share Posted April 20, 2016 Example: Where I live, going to Disney (FL) is very popular. I guess it's popular everywhere but it's a typical winter or spring break thing here. Say a family has never been able to afford it, but they want to. They come into some money, say a small inheritance or a tax refund. They think "we should save this" (or pay off bills, whatever) but their kids are getting older, and opportunities to travel with them as a family are dwindling. So they take that money and go to Disney. Maybe they go into a little debt to do it - the windfall doesn't cover the whole thing. But, now they've done this thing they've been wanting to do for years. Were they wrong to spend that money having this great experience with their kids, instead of saving for retirement that may never come anyway, or paying off bills they can keep chipping away at for years? (I don't know if I can answer that question.) Personally, I'm not against a "stretch." We've done that a few times ourselves, but we also still had some buffer and a plan for covering it down the road. We went on a trip last summer where we had only saved 1/2 of it, but we had no ongoing balance on our cards. We had a little in savings. I had contracts lined up for the fall that would easily get it paid off by Christmas. We went, and indeed got it paid off. But until everything was paid off, we didn't do anything else like that. There was a family wedding many states away that would require a plane trip and several other things that we didn't do while we were paying it off. In other words, we didn't let it cascade. Quote Link to comment Share on other sites More sharing options...
SKL Posted April 20, 2016 Share Posted April 20, 2016 (edited) A beater car made sense for me, because it cost me less than a 1-month car payment. It actually ran for years. I would not have put any serious money into fixing it. After some years, my dad traded me for his "better beater" and my kid brother got my old one. I still didn't have a car payment or much maintenance for some time. I was rear-ended by a semi and that totaled the "better beater." The positive is that for years, I was able to use money for something other than car payments. (In my case, basic living expenses and then student loan payments.) I don't know Dave Ramsey, but I would support the idea of buying a cheap beater but not trying too hard to keep it running. Just junk it and get another cheap beater until you can afford a car payment. :) ETA I know someone is going to say you need a reliable car. Obviously a true beater isn't going to work for everyone. It depends on how much rests on your own personal car working 100% of the time. Many people have enough options that having a perfect car isn't necessary. Edited April 20, 2016 by SKL 5 Quote Link to comment Share on other sites More sharing options...
Garga Posted April 20, 2016 Share Posted April 20, 2016 (edited) I bumped into this article today. It's about how homeschoolers all think they're poor and expect everything to be free. http://www.homefires.com/articles/what_is_with.asp I don't really know how it relates to this thread, but it seems to. Because I run into lots of homeschoolers who do expect everything to be super cheap and it baffles me. I'm thrify, yes, but sometimes you just have to pay someone what is their due for creating a class or a curriculum, etc. Money and our attitudes toward it is so complicated! Edited April 20, 2016 by Garga 14 Quote Link to comment Share on other sites More sharing options...
Guest Posted April 20, 2016 Share Posted April 20, 2016 Yeah, I don't get the beater car mentality. I mean, if it's all someone can afford, that's one thing. But really it can get to the point that it is more expensive because of repair bills, and an unreliable car can impact people getting to work. We had a car that was getting unreliable. We were trying to keep it going to avoid the pain of buying something new. Finally we had to. When we got the new car, I realized how stressed out I had been every time I got behind the wheel of the other car. Would I get the kids to school that day? To their doctor appointment? Forget about driving somewhere we didn't need to go. Stress can have a real cost too. I feel for anyone who has to drive an aging, unreliable car, and I can't imagine why anyone recommends driving one as a good financial strategy. Well, I drive an old, unreliable car as part of our financial strategy. But I think part of how much this matters depends on how good or poor your other options are. Our car has broken down multiple times last year and this year; you see that in the Nothing New threads. Still, though, even if we spent $1200 last year in repairs, that is far less that the $12,000 minimum we would have to spend to replace the car, even with another car that isn't very new or very fancy. So, balancing that with the very fortunate position that I am not totally up a creek if it breaks down. At worst, a kid might miss a dental appointment or be late to school that day. But we have other resources for cars we could borrow in a pinch. It also is not "impossible" for us to buy a new car, it's just something not critical that I can afford to ride out for a while yet. Sometimes people see cars in very stark false comparisons. As if they can only either have a brand new $40,000 car, or drive in a barely-viable clunker to save money. There are a whole lot of serviceable options in the middle. When I was 20-some, I bought a new car. I had a heck of a commute to work each day and it was important that my car have lots of life in it and be reliable. So I bought a new car. But it was a Saturn sedan. It was not fancy, just clean and reliable. Some of my friends mocked me for buying a "mom" car. But I mocked them back because my car payment was only $126/month and my loan was short. (3 or 4 years, I think.) I was working as a Legal Secretary and yes, it did actually matter that I wasn't driving in a trashed jalopy. But there are many options that fall between jalopy and Jaguar. 10 Quote Link to comment Share on other sites More sharing options...
Guest Posted April 20, 2016 Share Posted April 20, 2016 No one asked where our money goes lol, but it goes to good food. By which i mean real, whole ingredients. Until the last one, literally every raise dh got just went to better food. Certain parties made it clear to us that we "should" be saving that money. After growing up on poor folk' food and dealing with the fallout of that, we disagreed completely. Weve been there, as adults, where our kids are drinking powdered milk (gross) and theres no savings and we cant do anything and we cant weather any storms. My point is, its basically useless to critisize what other people do with their money, as individuls. By all means, lets critisize social mores, but that only gets you so far too. As was mentioned upthread, medical debt is HUGE. With that in mind, would we have been better ofd saving money or did we do right by our kids/society/ourselves to pour all our extra money into food (and we eat notoriously plainly...its just we started out so low)? Ykwim? This is a rhetorical question....im just saying sometimes people have good reasons for not having savings. Quote Link to comment Share on other sites More sharing options...
AmandaVT Posted April 20, 2016 Share Posted April 20, 2016 Not to mention that the Dave Ramsey beater car risks breaking down, leading to costly tow bills and repairs. Sometimes it's better to have a guaranteed car payment, knowing that it's likely a reliable vehicle. My beater minivan was all well and good, nice not having a car payment, until it left me stranded too many times, and with expensive repair bills. Yup, this is where we parted ways with DR. We were following his plan to a T for awhile. And that's how we couldn't afford an emergency. We had 2 in a row. The first one drained the emergency fund (CV joint blew on the highway). And the second came before we could start recovering from the first. An emergency root canal for me that couldn't wait. I was in agony. Endodontist needed the full amount before he finished the root canal. I had to borrow money from my dad and that was one of the catalysts for us to get a credit card again. We only use it for emergencies, but I felt really dumb not having one and needing to go to my dad for help at 32 years old. We had enough car problems with our "good" beater cars that we didn't have a car safe to drive to my aunts funeral and had to rent one. That's when we bought a better car with a small payment. It's more important for us to get to family when we need to and be able to pay for an emergency with a credit card than it is to pay off debt that aggressively. Thankfully, we've still been able to make headway and we have cars that don't require multiple $2000+ fixes a year and if I need another emergency dental appointment, I can pay for it without turning to my dad in mortification. 1 Quote Link to comment Share on other sites More sharing options...
Scarlett Posted April 20, 2016 Share Posted April 20, 2016 Not to mention that the Dave Ramsey beater car risks breaking down, leading to costly tow bills and repairs. Sometimes it's better to have a guaranteed car payment, knowing that it's likely a reliable vehicle. My beater minivan was all well and good, nice not having a car payment, until it left me stranded too many times, and with expensive repair bills. My experience with my vehicles has been that the repairs are no where near as expensive as a new/used vehicle. My current vehicle.....a 2007 crossover with 150k miles has given me a fair amount of trouble. But a payment for something similar would be $400 per month. $$4800 per year. I haven't spent that much on repairs in the 7 years I have had it. I don't want a car that can't be depended on. But I think that is a seperate issue from repairs not being worth it. 5 Quote Link to comment Share on other sites More sharing options...
Scarlett Posted April 20, 2016 Share Posted April 20, 2016 Yup, this is where we parted ways with DR. We were following his plan to a T for awhile. And that's how we couldn't afford an emergency. We had 2 in a row. The first one drained the emergency fund (CV joint blew on the highway). And the second came before we could start recovering from the first. An emergency root canal for me that couldn't wait. I was in agony. Endodontist needed the full amount before he finished the root canal. I had to borrow money from my dad and that was one of the catalysts for us to get a credit card again. We only use it for emergencies, but I felt really dumb not having one and needing to go to my dad for help at 32 years old. We had enough car problems with our "good" beater cars that we didn't have a car safe to drive to my aunts funeral and had to rent one. That's when we bought a better car with a small payment. It's more important for us to get to family when we need to and be able to pay for an emergency with a credit card than it is to pay off debt that aggressively. Thankfully, we've still been able to make headway and we have cars that don't require multiple $2000+ fixes a year and if I need another emergency dental appointment, I can pay for it without turning to my dad in mortification. Seems like two different points here. I like DR but he is a little radical for my tastes. Some people need radical though. But I think having a credit card is not the problem. It is how the word emergency gets defined. Car repair and tooth problem.....both emergencies to me. However car repairs still aren't more expensive than a new/ER car. I would think. It is just that a new car is so easy. Spread out the payments to 7 years and feel secure. It is similar to how easy it is to get a mobile home if you have a spot of land. That doesn't mean it is the wisest use of money.....the same money could purchase a MUCH better home....but it is more complicated. Quote Link to comment Share on other sites More sharing options...
kbutton Posted April 20, 2016 Share Posted April 20, 2016 Having recently moved from "poor" to "lower middle class", I'm still reeling from the realities of how broke we still are, and looking back wondering how we limped along as long as we did with as little as we did while living off my student loans. We felt that way, and we still feel that way every time we "move up a notch." I would say the category we're in within middle class is one that has a lot of room in it--to move out of it upwardly, we'd need a lot more money, and to move down, we'd have to have a significant hit on reserves (but is certainly possible). Our place in the middle class has more to do with cushion than with outright income. We don't feel scared about the future, but we feel very sober about our finances! As for those who are talking about feeling smug...we are very, very aware that if even just a couple of things were different when we started out, we would not be where we are now... ...if my first car's transmission had died a month earlier, we would have had to fix it and then not have been able to afford the extraordinarily under-priced car we bought from an estate. We drove that way-below-blue book car another DECADE or so. ...if groceries and gas cost then even close to what they do now, we would not have been able to pay more on our student loans per month than we did on our rent. (Both of us had moderately long commutes in opposite directions for years, even with job changes, so gas was a huge factor for us.) ...If we had not decided to leave one income untouched for the 8 months or so that we both worked (DH had some PT or very low wage jobs when we first married, but he mostly went to school for the first several years), then we would not have had money to live on when DH was unexpectedly laid off from his first job post-graduation. ...if we hadn't bought a house FAR below what we qualified for with a mortgage (and been able to afford that amazing used car), we'd have no wiggle room because of how much food, gas, etc. has gone up in the meantime. ..if several of those things were different, we'd still be living with marginal savings now. The list could go on and on, and the COL in our area has skyrocketed in the last decade. It's still a LCOL area overall, but housing is crazy--everyone lost major value in their homes when the market tanked, but that just jacked up rent prices for those who couldn't afford to go buy a foreclosed house (or fix the foreclosed houses since many were in bad shape because people couldn't afford maintenance). So, no smugness here, and I still don't understand the spend, spend, spend mentality around us. It's not quite NoVA area as others have noted, but it's frighteningly close. Neighbors who have been working FT on two incomes in good jobs while I was putting a spouse through school talk about not being able to afford car repairs (and we're talking a course of study that is expensive at any school that offers it, no scholarships, and no financial aid outside of student loans). However, in the time we've lived next to them (more than a decade), they are on NEW cars #5 and #6 while we are on USED cars #3 and #4 (we wish they'd tell us when they are going to trade-in--in one case, we were in the market for exactly what they were dumping and would've probably paid them more than a dealer did, and we'd have paid cash!). They have had more TVs than I can count (we had one given to us, and we finally broke down and bought a flat screen because it was the cheapest way to get back needed square footage!). I can't even describe the volume of hunting, fishing, and camping equipment that they've acquired (not including the boat and camper)--my dad was an outdoorsman when I was a kid, and he had ONE fishing rod (and caught scads of fish with it), one rifle (and had plenty of venison), etc. And while we are frugal, we're not crazy frugal by any stretch. 2 Quote Link to comment Share on other sites More sharing options...
SKL Posted April 20, 2016 Share Posted April 20, 2016 I agree that buying a used car that you expect to last can be more complicated. I have never done it because I don't feel expert enough to evaluate a used car, and I don't trust salesmen. :P I do know people who have had success with used cars, but I wasn't up to the uncertainty once I could afford a modest new car. I was on my own and didn't have a lot of hands-on car experience. My choices might have been different had I had a close family member who could troubleshoot car issues etc. Or if I had the inclination to learn the skills. Nowadays that might be more of an option thanks to the internet. :) Quote Link to comment Share on other sites More sharing options...
HS Mom in NC Posted April 20, 2016 Share Posted April 20, 2016 Like others have pointed out, there really are 2 kinds of people in debt. Group A makes bad financial decisions (not aware that they are bad decisions) and puts themselves closer and closer to the precipice with each one. Group B has some sort of tragedy befall them that isn't their fault that puts them on the precipice. My husband and I have done some group A decisions. We don't anymore. Group A type decisions never thinks of savings as a regular expense not making decisions based on take home pay not getting any marketable AND in demand skills at all getting a degree that doesn't have enough earning potential to pay off the debt quickly(College is not for personal development or pursuit of personal interests unless you're very wealthy. It's an investment in your career.) not continuing to live at home during and immediately after a degree and paying off the debt (Won't even consider it.) buying too much car (Buying new instead of used, too high a monthly payment, not enough down payment, doesn't have an excellent repair record and low gas mileage.) Lives on 2 incomes (Planning to always live on 1 income, even if you have 2 is the safest bet. If one person loses an income, the other can keep things afloat. If you have a 2 income lifestyle and one person loses an income, you're in trouble.) buys too much house (Square footage per person has skyrocketed over the last 3-4 generations) gets a 30 year mortgage (No one should get a 30 year mortgage, ever.) has housing expenses that exceed 25% of their take home pay (Seriously, read some Dave Ramsay.) insists on staying where the COL is too high for their income bracket eats out when they can't afford it (Never a necessity) doesn't learn to cook cheap meals at home and meal plan strategically buys too many clothes for too much (Wardrobes are the largest in history.) buys too many entertainments (No, you don't need a smart phone, TV, or most of your electronics. Business is done over computer so it makes sense to own one but you don't need the latest and greatest.) Private school. (If you can't afford it, you can't afford it.) Extra curriculars ( Music, art and sports are valuable, but no one is entitled to them and no one will wither and die without them.) Hobbies (Don't take up or continue one you can't afford.) Toys (Your kids don't need them. Neither do adults. They can get new ones at gift giving occasions and earn money to buy at other times.) Vacations (Somehow people got entitled to these. Needing a break from work and school does not mean you have to travel when you can't afford it.) Group B catastrophes expensive illness or injury spouse abandons them industry collapses suddenly due to new technology other things like that 11 Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted April 20, 2016 Share Posted April 20, 2016 Not intending to sound judgy, but yes a lot of people stretch themselves for the better house in the better neighborhood rather than feel a little more financially secure because I believe in large part it IS about keeping up appearances or feeling that people are judging you less. We opted not to stretch and go with something below our means to feel more secure. But yes I've endured negative comments about the city I live in. I also put up with a higher crime rate and schools that have a lousy reputation (I didn't so much care about the schools because I homeschool). I might stretch myself for better schools. Not so much the reputation or keeping up appearances part. I do think that is something worth stretching for. Or at least it's very understandable. 1 Quote Link to comment Share on other sites More sharing options...
Laurie Posted April 20, 2016 Share Posted April 20, 2016 I had to stop reading when I realized he was crying over the debt he accrued while living in New York City, sending his daughters to private schools for years upon years, then - oh the horror - having to pay for Stanford, Harvard, Emory, etc, for his daughters. Sorry, but the woe-is-me just got under my skin. He's got no one to blame but himself. I get what he's saying, but I did feel like he was trying to justify his living beyond his means by comparing it with people who honest and truly are struggling with overwhelming debt through no fault of their own. But his daughters "earned" the right to go to those expensive schools! As an aunt of mine would say, they've got a champagne appetite on a beer budget. And this is an epidemic. A young relative of mine also thought she had earned the right to go to the fancy school and turned down a full scholarship to a state university. So, her parents and both sets of grandparents (none of them rich) forked over the money so this young thing could go to her fancy school and then she has the nerve to complain about how her parents drink CHEAP wine! She isn't to blame, of course, because I was reminded here of the college "lifestyle" they expect when they go to these schools after reading about the college girls who expect the schools to provide their tampons. There isn't just cultural appropriation on the college campus...there's financial appropriation, too. Then there are the parents who complain that they can't afford shoes for their children. You try to help, only to find out that daddy would rather let other people provide shoes for his kids and has no shame in then going out to get himself another tattoo. A young woman in my neighborhood whined and whined to me about how they are trying to save money to start a family. The stinking pot she's smoking may be legal, but it sure isn't free! And these are people who also make it a practice to rely on OTHERS to be good neighbors and lend them things. I'll bet they don't even have the 3 day emergency food/water supply...they'll expect to borrow that, too. Shame is right. And it's no secret...plenty of us are on to them. If my kids wanted to be unscrupulous, they have the financial means to go into business as loan sharks right now. They've got money in the bank, but no tattoos, clown colored hair, body-piercings, etc. like the people we see everyday. 2 Quote Link to comment Share on other sites More sharing options...
leeannpal Posted April 20, 2016 Share Posted April 20, 2016 I did not read the whole article, but I read some, and here's where I have an issue: my perception is that a very large proportion of middle- to upper middle households spend a ton of unnecessary and frivolous money mindlessly because they simply perceive it as normal and what everyone else does. If this were not so, it wouldn't be a thing to have your teenage daughter's hair ombréed or dress your 10-year-old in head-to-toe Under Armour. I used to think it was extravagant when families took yearly trips to Disney, but now I have many middle- to upper middle friends who are taking their family of five to Europe or New Zealand. Keeping up with those darn Jonses is still alive and well, which leads me to think MANY people do not prioritize having any savings cushion, let alone a decent cushion. They prioritize the excesses of family life because they think that is normal. On of my friends on FB made a remark about realizing how much Under Armour she had bought over time for her three kids (the oldest is 14). The way she phrased it, she clearly thinks "everybody" does this. So, she's acting shocked at all the money she has spent on just this one brand of clothes, but she *thought* that's what "everybody" does. She expressed complete astonishment at the few responders (myself being one) who said they own no clothing of this brand, or just a few pieces mostly obtained second-hand. So while, yes, sometimes you might have credit card debt because your transmission in your 13-year-old car just tanked or you have to fix your son's four front teeth because he had mouth trauma when he was eight and ruined them, I have to strongly suspect that there are also charges because your daughter "had" to have her hair ombréed, or your son will not wear Keds because they aren't Nikes. I am not disagreeing with the idea that some people mismanage their money, but most people tend to know others in their own socio-economic class, and therefore don't really see the plight of middle class people who work hard and barely stay afloat. In my case, we can handle an emergency of a few hundred dollars, but we couldn't do that every month. I am a teacher at a private school making almost as much as a public school teacher here in Florida does. My husband works 60-70 hours almost every week. We still are finding it hard to get by without all the extras you mention. For us, it is the emergencies that are doing us in. In the last year, we lost both our cars-cars that we had paid cash for because we were intent on trying the Dave Ramsey method. My husband's car developed as sudden, massive oil leak that literally killed the engine as he was driving. There was nothing he could do. My car's transmission had a piece break off that destroyed a major part of the transmission. It would have cost almost twice what the car was worth to fix the transmission. Even the mechanic told us it wasn't worth it. These emergencies happened within 2 month of each other, totally wiping out our savings. We now have newer, better cars and two car payment because in no way could we afford to outright buy two more cars. This year, we have also had a couple of medical emergencies requiring emergency room visits, and , last month, we had an issue with our house that cost over $700.00 dollars to repair. We do not use credit because we have only fair credit scores mostly due to medical bills. I know many people love Dave Ramsey, but when you can never get off step one because you have to keep replenishing your emergency fund, it feels kind of defeating after a while. This summer, I will be making more money, and we have managed to get rid of a couple of bills saving us about $500.00 a month. We are getting there, but, unless some rich uncle leaves us money soon, I don't see things getting drastically better for us any time soon. Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted April 20, 2016 Share Posted April 20, 2016 I did not read the whole article, but I read some, and here's where I have an issue: my perception is that a very large proportion of middle- to upper middle households spend a ton of unnecessary and frivolous money mindlessly because they simply perceive it as normal and what everyone else does. If this were not so, it wouldn't be a thing to have your teenage daughter's hair ombréed or dress your 10-year-old in head-to-toe Under Armour. I used to think it was extravagant when families took yearly trips to Disney, but now I have many middle- to upper middle friends who are taking their family of five to Europe or New Zealand. Keeping up with those darn Jonses is still alive and well, which leads me to think MANY people do not prioritize having any savings cushion, let alone a decent cushion. They prioritize the excesses of family life because they think that is normal. On of my friends on FB made a remark about realizing how much Under Armour she had bought over time for her three kids (the oldest is 14). The way she phrased it, she clearly thinks "everybody" does this. So, she's acting shocked at all the money she has spent on just this one brand of clothes, but she *thought* that's what "everybody" does. She expressed complete astonishment at the few responders (myself being one) who said they own no clothing of this brand, or just a few pieces mostly obtained second-hand. So while, yes, sometimes you might have credit card debt because your transmission in your 13-year-old car just tanked or you have to fix your son's four front teeth because he had mouth trauma when he was eight and ruined them, I have to strongly suspect that there are also charges because your daughter "had" to have her hair ombréed, or your son will not wear Keds because they aren't Nikes. I don't know. I think the real major stretch for many is the house/cars and not necessarily mindless spending. I tend to buy "stuff" and "fun". It's another reason I wanted a less expensive house. I didn't want to be house poor. I know several house poor people. These are the people who live in a gorgeous house in a great neighborhood who don't want to come bowling with us because they don't have the money (meanwhile by comparison I live in a crap shack). 1 Quote Link to comment Share on other sites More sharing options...
Guest Posted April 20, 2016 Share Posted April 20, 2016 I bumped into this article today. It's about how homeschoolers all think they're poor and expect everything to be free. http://www.homefires.com/articles/what_is_with.asp I don't really know how it relates to this thread, but it seems to. Because I run into lots of homeschoolers who do expect everything to be super cheap and it baffles me. I'm thrify, yes, but sometimes you just have to pay someone what is their due for creating a class or a curriculum, etc. Money and our attitudes toward it is so complicated! HaHa, yeah...once a woman at our hs co-op asked indignantly why we don't have sibling discounts. (She had twins.) umm...because this is a group run entirely by parents, running entirely on the member fees and class fees paid by the parents! 98% percent of the members had more than one child. Sibling discount? Who is going to pay for the shortfall when 100 kids get a discount?! 4 Quote Link to comment Share on other sites More sharing options...
leeannpal Posted April 20, 2016 Share Posted April 20, 2016 My experience with my vehicles has been that the repairs are no where near as expensive as a new/used vehicle. My current vehicle.....a 2007 crossover with 150k miles has given me a fair amount of trouble. But a payment for something similar would be $400 per month. $$4800 per year. I haven't spent that much on repairs in the 7 years I have had it. I don't want a car that can't be depended on. But I think that is a seperate issue from repairs not being worth it. I hope it doesn't happen for you, but it only takes one huge, expensive repair such as a new motor or transmission to make that $4800.00 look good. 2 Quote Link to comment Share on other sites More sharing options...
tm919 Posted April 20, 2016 Share Posted April 20, 2016 (edited) I don't feel like I can be too critical of people who are just trying to provide what they think is "normal" to their kids, even if it seems crazy to me. Agree... I'm guilty of having a lot of guilt about what I can't provide to my children... A big part of it is that I just don't want them to feel sad about what they don't have, so young. But I've come to believe it is inevitable for us. I can understand how people go down that path though... My 6 year old is old enough to feel embarrassed when someone mocks her for not having a huge widescreen TV (...not sure I'll be inviting that child for another playdate). "Factually," she knows the truth -- that she has everything she needs, and many of the things she wants. But, she still feels envy and shame when other children act astonished she has never been to Disney (and knows she probably won't ever be in her childhood). I want her to learn the lessons she's learning -- be grateful for what you have, don't compare yourself to others -- but I wish I could protect her from the feelings she is having along the way. Edited April 20, 2016 by tm919 4 Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted April 20, 2016 Share Posted April 20, 2016 Oh I'd rather fork over for the new car. I'm pretty screwed when stuff breaks down. I have no back up. I have nobody to call for help other than my spouse and it might turn out to be a very bad time to call for help. I have gotten stranded in the freezing cold. After that I was so done with a car that broke down all the time even though it was cheaper even with repairs. I don't buy expensive vehicles though. 1 Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted April 20, 2016 Share Posted April 20, 2016 Oh and my take is "to each their own". I do not care how other people decide to do any of these things. And saving for emergencies aside, there is very little incentive to save money just for the heck of it. You basically earn zero interest on it. In fact you may end up paying to save money because of bank fees and having to claim the piddly arse amount on taxes (a freaking crime IMO, but that's another discussion). 7 Quote Link to comment Share on other sites More sharing options...
Seasider Posted April 20, 2016 Share Posted April 20, 2016 Not to mention that the Dave Ramsey beater car risks breaking down, leading to costly tow bills and repairs. Sometimes it's better to have a guaranteed car payment, knowing that it's likely a reliable vehicle. My beater minivan was all well and good, nice not having a car payment, until it left me stranded too many times, and with expensive repair bills. This is how I feel. A beater may be fine when one is first starting out. But when you reach the point of hauling a bunch of kids and/or have a job that can't flex if your vehicle is out of commission, that's a problem. We have found that after a certain golden window, the beater costs as much in repairs as a car note and surely may not retain resale value. And all the while one is also supposed to be setting the money aside for the next car. In some ways it's a shell game. I do think it unnecessary to feel like you have to drive a brand spanking new model, that's not usually the best investment. And if worked aggressively in as short a time window as possible, Ramsey's auto trade-up plan can work well. But you can't drive each beater into the ground because you need it's resale value to trade up. 2 Quote Link to comment Share on other sites More sharing options...
PeachyDoodle Posted April 20, 2016 Share Posted April 20, 2016 Like many of you have noted, dh and I have had this conversation repeatedly. HOW ON EARTH do the people we know afford the things they have?? Until recently, I worked part-time, and dh earns a good living -- much more than many of our friends (most of whom somehow seem to be in public service, so we have a good idea of their general income). We rent my grandparents' home from my dad for peanuts. When we moved here, it was supposed to be a 3- to 5-year arrangement while we planned to build our new home; we'll have been here 9 in October and are crossing our fingers that we'll be able to build this fall. Meanwhile, my MIL has MASSIVE amounts of debt, with no plans to do anything about it. Her house is literally rotting away because she "doesn't have the money" to fix it. About 6 months ago, dh made an attempt to help her get her finances in order and discovered that she runs $500 in the red every, single month. She has a part-ownership in a vacation home and leases a new car every 24 months. Heaven only knows what she spends on cigarettes. We've had a major falling-out with her over her insistence on taking dd to Harry Potter at Universal Studios (I posted on thread on that awhile back). When we first discovered all this, we looked at each other and said, "WHO LIVES LIKE THIS???" Apparently everybody. Or a large proportion of the population, at least. We're starting to figure out that WE'RE the oddballs here. Yes, I think so too. I don't know if people are consciously thinking they have to keep up appearances though. I just think there are many more products and services these days which are far more expensive than bygone days, and these are products and services that society has been persuaded to believe are what everyone has a right to and needs. So people just get them, whether they can really afford them or not. For years, as our family walked around with our one "dumb" phone that we shared among six people and had just two channels on our non-cable television, I was absolutely baffled at how everyone else seemed to be able to afford a smart phone for every member of their family and cable TV. And my dh had a good job too. Now don't get me wrong, I'm pretty sure we did things that baffled other people (we went on some fun trips!). But I do think in general, the products and services that have come to be expected within the middle class have just gotten so much more expensive, and incomes haven't kept up. In the end, I think what has helped us a lot is living in a very low-cost area. (We bought our home for $16,000!). We'll stay here until our youngest graduates from college. I think this is definitely true. When dh and I got married in 2000, we didn't have cell phones or even Internet -- but those things were not the necessities they seem to be now. We did pay for cable TV, which was a "need" my parents didn't have when they married in 1976. Every year, it seems the list of "needs" grows longer! We're so used to these things being available, we don't even think of them as the luxuries they really are. I read the article, and I can't get through the the idea that a fancy private school education is worth all the extra dollars. If you aren't rich enough to pay for it or smart enough to get scholarships, then you just should not go. Maybe it's because of the area of the country in which I live, but I don't know people who went to private schools, but yet I know plenty of successful people. They aren't working at some elite New York law firm, but they have money to spend, jobs with which they are content, and are doing just fine. My kids won't be going to a fancy private school unless they get scholarships, and I have no guilt about that. I have a Masters in Social work, like the author's daughter, and unless she knows something I don't, she won't be making enough money anywhere anytime soon to make up for the financial damage done to her grandparents and parents. She could have gone to a basic state school and done just as well. Working with traumatized children does not pay well. It's a wonderful calling, absolutely--it's what I did! But it never never would have occurred to me that any family members of mine should pay for it, or that I should go into enormous debt to pay for it. I remember seeing that Harvard had a social work program when I was going to get my masters. I thought it was insanity that anyone would go there for a MSW. My sister got both her undergrad and JD degrees from state universities. She interned at an elite New York law firm after her 2L year, and turned down a job offer from that firm when she graduated -- in favor of one from an elite law firm in DC. She was accepted to law school at several fancy private institutions, but turned them all down because she couldn't justify the cost. She had a full ride scholarship to a well-respected state law school and took full advantage of it. Her smart decisions have paid for themselves several times over and have not jeopardized her career in the least! 3 Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted April 20, 2016 Share Posted April 20, 2016 In some states you really cannot get away with a beater because they require yearly inspections (where I live). Growing up my parents had some very cheap cars that would have never passed inspection here. 2 Quote Link to comment Share on other sites More sharing options...
Guest Posted April 20, 2016 Share Posted April 20, 2016 I am not disagreeing with the idea that some people mismanage their money, but most people tend to know others in their own socio-economic class, and therefore don't really see the plight of middle class people who work hard and barely stay afloat. In my case, we can handle an emergency of a few hundred dollars, but we couldn't do that every month. I am a teacher at a private school making almost as much as a public school teacher here in Florida does. My husband works 60-70 hours almost every week. We still are finding it hard to get by without all the extras you mention. For us, it is the emergencies that are doing us in. In the last year, we lost both our cars-cars that we had paid cash for because we were intent on trying the Dave Ramsey method. My husband's car developed as sudden, massive oil leak that literally killed the engine as he was driving. There was nothing he could do. My car's transmission had a piece break off that destroyed a major part of the transmission. It would have cost almost twice what the car was worth to fix the transmission. Even the mechanic told us it wasn't worth it. These emergencies happened within 2 month of each other, totally wiping out our savings. We now have newer, better cars and two car payment because in no way could we afford to outright buy two more cars. This year, we have also had a couple of medical emergencies requiring emergency room visits, and , last month, we had an issue with our house that cost over $700.00 dollars to repair. We do not use credit because we have only fair credit scores mostly due to medical bills. I know many people love Dave Ramsey, but when you can never get off step one because you have to keep replenishing your emergency fund, it feels kind of defeating after a while. This summer, I will be making more money, and we have managed to get rid of a couple of bills saving us about $500.00 a month. We are getting there, but, unless some rich uncle leaves us money soon, I don't see things getting drastically better for us any time soon. Don't miss my point, though. It wasn't that I *think* some people mismanage their money buying frivolities. What I am saying is this: why is there a market for designer fashion boots for 10-year-old girls? Why are there Gucci backpacks? Why are some kinds of shoes meant for teenagers (who outgrow them the next day) branded with a basketball star's name and selling for over a hundred dollars? If many/most people found these things crazy, there would not be a market. so this much we have established: many people DO buy these items, enough that it is viable for companies to sell them. The linked article is also establishing the fact that half the middle class is in a fragile enough position that the washing machine breaking throws them into a tail spin. It seems reasonable to me to deduce that at least some percentage of those fragile position middle classers are also the people who bought the Uggs for the girls and put LeBron's on their son's feet. Somebody buys these things, or they would not be a market. I am not talking about sitting by, quietly wondering how *that* mom has a Vitton purse and deducing she must be in debt. I'm talking about what is observable data: those purses are for sale, so *someone* is buying them and I have a feeling it's not *entirely* people who are very comfortable. 22 Quote Link to comment Share on other sites More sharing options...
Scarlett Posted April 20, 2016 Share Posted April 20, 2016 Oh I'd rather fork over for the new car. I'm pretty screwed when stuff breaks down. I have no back up. I have nobody to call for help other than my spouse and it might turn out to be a very bad time to call for help. I have gotten stranded in the freezing cold. After that I was so done with a car that broke down all the time even though it was cheaper even with repairs. I don't buy expensive vehicles though. I would do the same in your situation. 1 Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted April 20, 2016 Share Posted April 20, 2016 Like many of you have noted, dh and I have had this conversation repeatedly. HOW ON EARTH do the people we know afford the things they have?? Until recently, I worked part-time, and dh earns a good living -- much more than many of our friends (most of whom somehow seem to be in public service, so we have a good idea of their general income). We rent my grandparents' home from my dad for peanuts. When we moved here, it was supposed to be a 3- to 5-year arrangement while we planned to build our new home; we'll have been here 9 in October and are crossing our fingers that we'll be able to build this fall. Meanwhile, my MIL has MASSIVE amounts of debt, with no plans to do anything about it. Her house is literally rotting away because she "doesn't have the money" to fix it. About 6 months ago, dh made an attempt to help her get her finances in order and discovered that she runs $500 in the red every, single month. She has a part-ownership in a vacation home and leases a new car every 24 months. Heaven only knows what she spends on cigarettes. We've had a major falling-out with her over her insistence on taking dd to Harry Potter at Universal Studios (I posted on thread on that awhile back). When we first discovered all this, we looked at each other and said, "WHO LIVES LIKE THIS???" Apparently everybody. Or a large proportion of the population, at least. We're starting to figure out that WE'RE the oddballs here. Yeah some years ago I had a friend who lived in a very large brand new house in a very expensive town. She didn't work for pay and neither did/do I. I know her husband made more than mine, but we aren't talking double. I could not imagine how they afforded the house, the cars (three of them), the yearly vacations overseas on an income that was not double what my spouse makes. So I can only conclude that either they saved a lot of money before having kids when they were both working, or they live on credit or something. 1 Quote Link to comment Share on other sites More sharing options...
Scarlett Posted April 20, 2016 Share Posted April 20, 2016 In some states you really cannot get away with a beater because they require yearly inspections (where I live). Growing up my parents had some very cheap cars that would have never passed inspection here. Yeah, I guess I am not talking that level of beater. Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted April 20, 2016 Share Posted April 20, 2016 I would do the same in your situation. And I got my money's worth out of that car. It was my first car (new when I bought it). I had it for 15 years (it was a cheap KIA). Until the end I had no major issues with it. During the first 5 years included in the price was free road side, free oil changes, and a warranty. I really cannot complain. And when we were first married we both used that car. So overall I have not spent much on having access to a reliable car. 1 Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted April 20, 2016 Share Posted April 20, 2016 Yeah, I guess I am not talking that level of beater. But what level? Here they ding you for even minor things that an almost brand new car could have issues with. 1 Quote Link to comment Share on other sites More sharing options...
Murphy101 Posted April 20, 2016 Share Posted April 20, 2016 (edited) I hope it doesn't happen for you, but it only takes one huge, expensive repair such as a new motor or transmission to make that $4800.00 look good.My van is over 10 years old. If it ever has a $4800 repair, we'd have to get a loan (presuming we'd even qualify). If we were out in the situation of needing a loan for the van, we'd scrap the van and use the loan towards getting a newer used van. But the old van has more than saved us a small fortune. Even if we had to spend a few 10ks on a newer van, we saved a lot more than that over the 11 years we have had NO van payments at all. Cheap beater does not have to equal more expensive vehicle that never works. ETA: they did away with inspections here, but my van, even in its rust bucket state, would have passed if they still had them. I doubt it would pass in Cali, but then again, we'd probably only be able to afford to live under a bridge in Cali, so it's a moot issue. Edited April 20, 2016 by Murphy101 4 Quote Link to comment Share on other sites More sharing options...
Guest Posted April 20, 2016 Share Posted April 20, 2016 I don't know. I think the real major stretch for many is the house/cars and not necessarily mindless spending. I tend to buy "stuff" and "fun". It's another reason I wanted a less expensive house. I didn't want to be house poor. I know several house poor people. These are the people who live in a gorgeous house in a great neighborhood who don't want to come bowling with us because they don't have the money (meanwhile by comparison I live in a crap shack). But even that could simply be priorities, Sparkly. Maybe they actually hate bowling. Maybe they feel they would rather have a fancy home that piddle away money going to Rita's for a gelato, KWIM? My house is enormous. DH built it. My reputation for being frugal precedes me. So, it is possible someone might say, "Geez! That Quill and her DH live in a mansion but they make pizza at home every Friday because Quill doesn't want to spend $20 on a pizza! And she drives that crappy van from 2002 with rust coming through the wheel wells and making a funny squeak when she turns left! Plus, her son is just learning to drive - doesn't she *care* that he might break down in that crap-mobile? But no, I guess they poured every dime they had into that giant McMansion house in the woods!" :D My imaginary people are real b!tches. 22 Quote Link to comment Share on other sites More sharing options...
SKL Posted April 20, 2016 Share Posted April 20, 2016 But his daughters "earned" the right to go to those expensive schools! As an aunt of mine would say, they've got a champagne appetite on a beer budget. And this is an epidemic. Yeah, I have seen this in my extended family. Kid has a gifted IQ and she was offered a half scholarship to an expensive school. The other half is still way more than what student aid offers. So they came to me for a loan. I had to do the tough love thing (though I did give a generous gift), and they were so upset. I almost wish there weren't expensive schools creating all these comparisons that are largely meaningless. To me, you "earn" the right to go to an expensive school if you get a full scholarship, work and save the money, or some combination thereof. "I'm smart and I got good grades" doesn't cut it. Going to a fancy school is not a "need." 6 Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted April 20, 2016 Share Posted April 20, 2016 Yeah $4800 repair I'd need a loan for that too. A personal loan for that amount we could get at about 6% interest from the credit union. A new car loan would be about 1% interest rate. Now granted it still may be cheaper to hold onto the older car. But that's taking a chance too because if it needs another costly repair before you are done paying back on the first major repair, you might be screwed. I would rather pay more for the security. And I really need it because as I said I do not have anyone around who can help in any way. Quote Link to comment Share on other sites More sharing options...
happypamama Posted April 20, 2016 Share Posted April 20, 2016 Like many of you have noted, dh and I have had this conversation repeatedly. HOW ON EARTH do the people we know afford the things they have?? Until recently, I worked part-time, and dh earns a good living -- much more than many of our friends (most of whom somehow seem to be in public service, so we have a good idea of their general income). We rent my grandparents' home from my dad for peanuts. When we moved here, it was supposed to be a 3- to 5-year arrangement while we planned to build our new home; we'll have been here 9 in October and are crossing our fingers that we'll be able to build this fall. Meanwhile, my MIL has MASSIVE amounts of debt, with no plans to do anything about it. Her house is literally rotting away because she "doesn't have the money" to fix it. About 6 months ago, dh made an attempt to help her get her finances in order and discovered that she runs $500 in the red every, single month. She has a part-ownership in a vacation home and leases a new car every 24 months. Heaven only knows what she spends on cigarettes. We've had a major falling-out with her over her insistence on taking dd to Harry Potter at Universal Studios (I posted on thread on that awhile back). When we first discovered all this, we looked at each other and said, "WHO LIVES LIKE THIS???" Apparently everybody. Or a large proportion of the population, at least. We're starting to figure out that WE'RE the oddballs here. I think this is definitely true. When dh and I got married in 2000, we didn't have cell phones or even Internet -- but those things were not the necessities they seem to be now. We did pay for cable TV, which was a "need" my parents didn't have when they married in 1976. Every year, it seems the list of "needs" grows longer! We're so used to these things being available, we don't even think of them as the luxuries they really are. My sister got both her undergrad and JD degrees from state universities. She interned at an elite New York law firm after her 2L year, and turned down a job offer from that firm when she graduated -- in favor of one from an elite law firm in DC. She was accepted to law school at several fancy private institutions, but turned them all down because she couldn't justify the cost. She had a full ride scholarship to a well-respected state law school and took full advantage of it. Her smart decisions have paid for themselves several times over and have not jeopardized her career in the least! Before I had children, I worked as a real estate assistant, and because in PA, you can't even give the price of a house over the phone without a license, my boss paid for me to take real estate classes and get my license, so I could help her better. I used to show houses in the Philadelphia suburbs. Man, some of those houses were amazing! Granted, this was around 2000, but $400K for a house was pretty average. My boss wouldn't even take on buyers looking to spend under $200K because it wasn't worth her time for the "piddly" commission; she shuttled those buyers to me (which was nice; it was a good deal for both of us). I thought multiple times, "WHO can afford these things??" 1 Quote Link to comment Share on other sites More sharing options...
Matryoshka Posted April 20, 2016 Share Posted April 20, 2016 (edited) My dd has been telling me some interesting stories about some of her friends at school and their parents' advice as to where to go... One of her friend's parents told her she wasn't allowed to go to any school that offered her a scholarship because they obviously weren't "good enough" for her. :confused1: I can only guess they have tons of money??? ETA: I should add this kid is massively smart and has fantastic stats, she probably got scholarships at most places she applied... Another of her friends is trying to choose between two schools, one of which is wildly unaffordable for her parents, but they say it's her choice and they'll just 'make it work'. She says she actually wishes her parents would just say 'we can afford X' (which is pretty much what we did for our kids) - she actually feels more pressure because if she chooses the 'better' school she's also 'choosing' to put her parents in massive debt (which they seem to think is worth it for the 'better' brand). And they do have a younger kid as well... Edited April 20, 2016 by Matryoshka 1 Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted April 20, 2016 Share Posted April 20, 2016 But even that could simply be priorities, Sparkly. Maybe they actually hate bowling. Maybe they feel they would rather have a fancy home that piddle away money going to Rita's for a gelato, KWIM? My house is enormous. DH built it. My reputation for being frugal precedes me. So, it is possible someone might say, "Geez! That Quill and her DH live in a mansion but they make pizza at home every Friday because Quill doesn't want to spend $20 on a pizza! And she drives that crappy van from 2002 with rust coming through the wheel wells and making a funny squeak when she turns left! Plus, her son is just learning to drive - doesn't she *care* that he might break down in that crap-mobile? But no, I guess they poured every dime they had into that giant McMansion house in the woods!" :D My imaginary people are real b!tches. Absolutely. It is their choice. But that is not how they put it to me. It was more like we are just too broke for that. Like wink wink maybe you could help us out. I'd help someone out no problem, but in that case...uh I don't know. I feel less charitable. I mean sure who knows maybe some thing happened that created a lot of debt outside of their expensive this or that. I don't make pizza, but I'm happy with the $5.99 take and bake pizza from the grocery store (verses the $20 pizza at the restaurant down the street). 2 Quote Link to comment Share on other sites More sharing options...
SparklyUnicorn Posted April 20, 2016 Share Posted April 20, 2016 Oh yeah crazy. I did once meet up with someone for bowling and at the end she confessed she was too broke for the bowling. In her case that I believe, but um gee it would have been far less obnoxious to tell me that beforehand. 1 Quote Link to comment Share on other sites More sharing options...
Katy Posted April 20, 2016 Share Posted April 20, 2016 I will say this... even though we somewhat do the Dave Ramsey thing, there is no way $1,000 is enough of an emergency fund when you own a house, beater cars, have kids and don't have any credit cards. An emergency credit card is fine. A $5,000 fund should be sufficient, but $1,000 is definitely not. 18 Quote Link to comment Share on other sites More sharing options...
Murphy101 Posted April 20, 2016 Share Posted April 20, 2016 But even that could simply be priorities, Sparkly. Maybe they actually hate bowling. Maybe they feel they would rather have a fancy home that piddle away money going to Rita's for a gelato, KWIM? My house is enormous. DH built it. My reputation for being frugal precedes me. So, it is possible someone might say, "Geez! That Quill and her DH live in a mansion but they make pizza at home every Friday because Quill doesn't want to spend $20 on a pizza! And she drives that crappy van from 2002 with rust coming through the wheel wells and making a funny squeak when she turns left! Plus, her son is just learning to drive - doesn't she *care* that he might break down in that crap-mobile? But no, I guess they poured every dime they had into that giant McMansion house in the woods!" :D My imaginary people are real b!tches. I wish it were only my imaginary ones... So much does depend on what people don't see. Like who built your house. We have iPhones and Samsung galaxies. But they are refurbished used. So that saves a lot. Most of my kids have DS games, but again, we bought refurbished used. We also have Xbox, PlayStation and Wii - ALL we either used or gifted by my husbands parents. (Who absolutely refuse to EVER buy a practical gift, even if it's cheaper. I've requested for 21 years that they instead buy this like zoo or museum memberships or pay for summer camps or classes and they flat out get mad. Bc gifts should always be something fun! And popular. Quite a few times I know they bought nothing on the list my kids gave them for Xmas bc they heard other friends or on the news that such and such is THE thing all the kids want. But we didn't.) Most of our life is like that. New furniture? Not actually. Or it was scratch and dent. We have never had a vacation. Ever. The most we have ever done is a 3 day weekend within a 6 hour drive of home. And even that isn't very often. Not even yearly. No cable, tho over the last 10 years we added Netflix and a couple years ago we have Hulu. The most extravagant things we've ever had is pets. And that's only been within the last 9 years bc previously we couldn't have them. And college classes for the older kids, which I have no regret over. Home schooling too I guess, but given that 60% of graduating students in my region have to take remedial maths and English at the community college - I don't consider it a luxery or a waste that I've stayed home to home school them. 4 Quote Link to comment Share on other sites More sharing options...
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