The Secret Shame of Middle Class Americans

[SparklyUnicorn]

Yep. That too. They wanted access to him 24/7, but they sure as hell didn't want to pay for it. Not in wages and for sure not in covered expenses.

 

They actually called him while I was in active labor with two of our kids and they knew it. He had to step out to take the call bc otherwise... There's always the threat of that axe coming down.

 

I never wanted them to pay for his cell phone. But I sure as hell demanded he turn the damn thing off between certain hours and at certain events. I really resented it. He was working well over 50 hours, gone for weeks at a time, and then when he was home - he still wasn't really. And of course, that didn't put him in a very happy place either.

 

Oh gawd.

 

Well as I suspected there was no real need for the phone.  He literally never ever never uses it.  There is nothing he needs to know about it related to his job.  They just get on these weird kicks of claiming they need to do blah blah to be in line with their "visions" (and hallucinations). 

[ChocolateReignRemix]

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

You are wrong about 30 year mortgages. There are excellent reasons to use them. Buying new vs. used cars is also very dependent on individual circumstances.

[SparklyUnicorn]

That reminds me that we need a card with better travel rewards before DH's next trip. He has to pay for food and (their chosen) hotel up front, but the rewards from the $300/night linen closet in Manhattan are something I want to take advantage of.

 

He gets his reimbursements... as fast as he remembers to file his paperwork (I'm hearing that voice from Monsters Inc. in my head), but it's a large amount to float until then. Having to pay upfront for plane tickets would freak me out a bit, even though we'd be okay. Many would not.

 

At his prior job they gave them a card.  The card was in his name and he was in charge of submitting expenses to have the bill paid, but at least he didn't have to use his personal card.  Well actually at that time we did not even have a card.

 

We do now.  And yes the rewards stuff is nice. 

[Ravin]

Having dinner with family out of tradition is fine. Spending half your weekly grocery budget on a food item that half the guests don't like and 2/3 of it will end up in the trash is a choice. You can make that choice, but not recognizing those things as choices is the problem.

 

For a non-monetary example, we have spaghetti every Christmas Eve. It makes me ill, so I take a very, very small amount. Some years I don't eat it at all. In my mom's mind, eating something that makes you sick is just part and parcel of the holiday tradition, and she "can't help" but feel upset that I don't just put up with it one night a year. To her, it's not a choice. She's lactose intolerant and will eat ice cream on birthdays, even if it makes her ill, because not eating it isn't an option. To me it is, and I choose not to make myself sick for the sake of tradition.

 

Yeah, that's taking it kind of far. We have had years when we wouldn't have had Thanksgiving without doing it potluck style with friends/family, and I had one memorable year (my first year in the Navy) when my only Thanksgiving meal was someone else's leftovers because my aunt (who lived in the city where I was stationed) didn't bother telling me they were doing their dinner the weekend before and going camping over the actual holiday weekend until it was too late for me to make plans. I had foolishly thought I would get to spend it with family.

 

Other years, we've had 3 Thanksgiving dinners in a day--one so someone who had to work would get to have a holiday meal; one at a relative's home; and a third with friends.

 

Two turkeys in a week for the same group of people is kind of whack. Though even that doesn't need to cost too much if you plan ahead and find a decent sale, and the leftovers can be frozen and used for months.

[ChocolateReignRemix]

I think she meant that people with more expenses need more of an initial emergency fund because they could easily get hit with an emergency that costs them more than $1000. For example, if they have a car that isn't known for a great repaid record, they could easily have an emergency repair in the $1000+ range. IF that happens, they'll still be behind if they only have $1000 on hand.

 

You do know that just because a car has a "great repair record" doesn't mean it won't unexpectedly need a major repair, right? Those are averages, not guarantees.

[madteaparty]

Well, he undermined his argument when he drained his 401K to pay for his daughter's wedding. That's a pretty unhinged/idiotic/crazy thing to do, in my opinion.

 

But outside of that particular item, I think the article resonated with a lot of people trying their best to stay afloat. What a sad state of affairs.

 

I did drain a 401k once to put in a wood stove. That wood stove keeps me warm (literally!) and makes me happy every single day, half the year. Retirement, well I could get hit by car tomorrow. I realize this is reckless thinking but all this planning for the future gets exhausting ;) (I have another 401k. Please don't stone me).

[Ravin]

You know what irks me to no end?  When my husband goes on business trips (not often, but yes he has) the company makes him pay for everything up front out of his pocket.  So airline tickets, hotel, etc.  They reimburse.  This makes me mad.  Ultimately it turned out ok, but for many years we didn't use credit cards.  You can't really do this without that.  The process of getting your money back is also very convoluted so if that's not 100% right there are delays.  Delays can mean interest making it more expensive. 

 

Since it is very infrequent it's not a hill to die on, but if it were this could be a major problem. 

 

This happens with my job. Fortunately, it's fairly easy for me to come out ahead. Most of the time I can find a motel that's about the same as what I get reimbursed, and I eat cheaply so that I'm not spending much more than I would if NOT traveling, and can pocket the rest. Also my car gets excellent gas mileage, so I get per mile reimbursement that's a good deal more than the drive costs me.

 

So far, there has only been one occasion when I'm having to foot a bill that will probably be higher than my reimbursement, and that's because I plan on having kids in tow, therefore am going to stay in the snazzy hotel where the conference I have to go to is being held, instead of finding a cheaper motel nearby. I will still probably be able to feed the kids and myself for what I will be reimbursed.

 

The problem will be, coming up with the cash if my reimbursment from my LAST travel hasn't arrived yet, since my credit card is maxed out.

 

It helps that we are pulling DS from preschool in mid-May (even though he could go up until kindergarten starts) when DH is done with his final exams.

[Ravin]

I could not house my family for 25% of my take-home pay. And I make a "living wage" for my family size. Even if I slept in my office instead of renting a room up here I couldn't do it. Rent and utilities currently uses not quite half of my take home pay.

[SparklyUnicorn]

This happens with my job. Fortunately, it's fairly easy for me to come out ahead. Most of the time I can find a motel that's about the same as what I get reimbursed, and I eat cheaply so that I'm not spending much more than I would if NOT traveling, and can pocket the rest. Also my car gets excellent gas mileage, so I get per mile reimbursement that's a good deal more than the drive costs me.

 

So far, there has only been one occasion when I'm having to foot a bill that will probably be higher than my reimbursement, and that's because I plan on having kids in tow, therefore am going to stay in the snazzy hotel where the conference I have to go to is being held, instead of finding a cheaper motel nearby. I will still probably be able to feed the kids and myself for what I will be reimbursed.

 

The problem will be, coming up with the cash if my reimbursment from my LAST travel hasn't arrived yet, since my credit card is maxed out.

 

It helps that we are pulling DS from preschool in mid-May (even though he could go up until kindergarten starts) when DH is done with his final exams.

 

Well on top of that they are required to use a specific company that makes all the arrangements.  So there is no way to shop around. 

 

Only time he made a bit of money was that they reimburse for food at a flat rate.  He spent a lot less than what they gave him.

[Murphy101]

You do know that just because a car has a "great repair record" doesn't mean it won't unexpectedly need a major repair, right? Those are averages, not guarantees.

If anything, it often means it's due for a major a repair or two.

 

When we have a repair issue come up, we always tell the mechanic to tell us anything else that might be wrong or likely to need work within the next 6 months or so. And we take that into consideration on whether it's time to trade in for a newer car or repair it. So one $1800 repair in 3 years and it doesn't seem like anything else is a major issue? That's a bargain compared to even one year of payments. $600 repair but a laundry list of other things that are going to nickel and dime us to death every time we turn around? No way. Time to trade in or scrap.

 

We just totaled a 2004 Pontiac sun fire. Man. That things was a sweet deal. I think dh paid something like 3k cash out of a tax refund for it about 8 yrs ago. Most reliable vehicle we've ever owned. Son scrapped it for $200 and used that to pay the tags on his newer Toyota carola that he paid $6k cash for frim his own savings acct. That car, if taken proper car of, should easily get him through college and maybe some more. And AAA is worth every penny. It's a lot cheaper than people think. Of course if you don't have it, you don't have it. Btdt. But we think road side assist is worth it.

 

Now dh bought a work truck, a tundra, early last year and we have this huge payment on it. When his side job was raking in a couple grand month, it was totally worth the payment to be able to do that job. But then the place shut down and placed all their contracts with a shipping company from out of state. Crap. Still have the truck payments though. I hate that truck now.

 

Especially as our next huge expense will probably be a new van for me. It's just a matter of time until I'm stranded somewhere with it. But I'll keep it until then bc it's paid off and I'll enjoy that feature as long as I can before we bite the bullet and get payments again. Gah. I hate the idea of car payments almost as much as credit cards or loans in general. We could buy a lot of education opportunities or church donations every month with those payments...

[HS Mom in NC]

Oh yes. This was a HUGE problem wi his last employer before he went contract. They'd demand he use the company travel agency (which put zero effort in booking decent deals for him in our opinion) but pay it entirely out of his own pocket up front wi only a few days a week notice of when and where. But they'd often take 6 iffin months to reimburse him and be total turds about what they would reimburse. Like $30 per day food allowance. Do you have any idea how hard it is to eat our 3x a day on that in Toranto for example? I would get so angry and he would get so frustrated. Because what ya gonna do? Quit and have no income at all?

 

That's crazy.  The company should've given him a company credit card that the company paid for.

 

[HS Mom in NC]

You are wrong about 30 year mortgages. There are excellent reasons to use them. Buying new vs. used cars is also very dependent on individual circumstances.

 

No, back in the 1960s and 1970s 30 year mortgages made sense for some people because job stability was very different than now.  Back in the day people had the same employer for decades.  That's not the norm now-it's the exception.  It's also poor use of money because of the amount of interest being spent.  House resale was better then because markets were more stable than they are now and people couldn't or wouldn't spend their equity before they sold their house.  Now a days, people should get a 15 year if you get one at all. Their housing costs should not exceed 25% of take home pay.  Housing costs are the single most common problem expense for most Americans.  

 

Yes as I've repeated many times in this thread, it's fine to buy a new car if you can afford a new car.  Most people who buy new cars can't really afford them because they're spending money on more car and none on savings and retirement.  If you can consistently save for savings and retirement at a reasonable rate and you can afford a new car and want one, then you should buy a new car.  If not, the new car is a bad financial decision unless you have unusually low expenses that make up for it.

 

[SparklyUnicorn]

That's crazy.  The company should've given him a company credit card that the company paid for.

 

 

This seems to be a very common practice (expecting the employee to pay upfront).

 

I think it's stupid. 

[HS Mom in NC]

You do know that just because a car has a "great repair record" doesn't mean it won't unexpectedly need a major repair, right? Those are averages, not guarantees.

 

No one ever claimed a repair would never be needed.  Or a major repair.  I don't know where you got the idea that I'm unaware of that.  That's what the $1000 minimum emergency fund and then the 3-6 months worth of expenses savings is for.  For the occasional.  However, people who do their homework can see that some vehicles have much worse repair records than others.  If you choose to buy a car that is more likely to have repairs then you should plan accordingly by having additional savings beyond the general guidelines because you know darn well it's more likely to happen.  If you buy a car without doing that kind of homework, you're choosing to gamble and gambling rarely pays off.

 

Edited April 20, 2016 by Homeschool Mom in AZ

[HS Mom in NC]

I could not house my family for 25% of my take-home pay. And I make a "living wage" for my family size. Even if I slept in my office instead of renting a room up here I couldn't do it. Rent and utilities currently uses not quite half of my take home pay.

 

The guideline is for take home pay for the household.  Of course, cutting back in other areas to make up for the added expense in that area is fine as long as when you add it all up it doesn't exceed 100%. 

[SparklyUnicorn]

No one ever claimed a repair would never be needed.  Or a major repair.  I don't know where you got the idea that I'm unaware of that.  That's what the $1000 minimum emergency fund and then the 3-6 months worth of expenses savings is for.  For the occasional.  However, people who do their homework can see that some vehicles have much worse repair records than others.  If you choose to buy a car that is more likely to have repairs then you should plan accordingly by having additional savings beyond the general guidelines because you know darn well it's more likely to happen.  If you buy a car without doing that kind of homework, you're choosing to gamble and gambling rarely pays off.

 

 

That and if you buy a new car it sometimes comes with a warranty.  I bought cars that had warranties.

 

Sure stuff can happen at any time, but I do try to minimize my risk.

[HS Mom in NC]

That and if you buy a new car it sometimes comes with a warranty.  I bought cars that had warranties.

 

Sure stuff can happen at any time, but I do try to minimize my risk.

 

That's why some people prefer to buy a used car for more through the dealer because it comes with a warranty too. Again, if you can truly afford a new one, fine.  If you can't, you can't.

 

[amy g.]

My son's company sent him to Mexico city for training and expected him to pay hotel, air fare and meals then get reinburesed on his next check. Fortunately I was able to have my credit card company overnight a card in his name, but on my account. I told him to charge expences then pay me back on payday. Otherwise it would have cost him all of his savings. I think his company just forgets that he is only 19 because everyone in the office is a college grad.   

 

We moved when my oldest was a week old and lost a folder of travel receipts for Dh's job. If his boss hadn't just paid us without proof we would have been in such a bad position. Company policy can be hard on young people. 

[SparklyUnicorn]

That's why some people prefer to buy a used car for more through the dealer because it comes with a warranty too. Again, if you can truly afford a new one, fine.  If you can't, you can't.

 

 

That can be a con verses a new car too though.  I bought new for my first car because I did not have good credit.  They told me if I buy new the interest rate is capped.  If I buy used there was NO cap on the interest rate.  So I could have potentially paid much more for a used car.

[HS Mom in NC]

Your #1 was not an option when I was in that income range.  However, I'll be teaching my kids about that.

 

No, the internet hasn't been around that long, but Consumer Reports has been around a long time and so have local mechanics.  Back in the day people went to their local library and looked up the car ratings in back issues or they borrowed it from Grampa or someone else who had a subscription because he was frugal or they talked to their mechanic because that's who knows which cars will cost you a fortune in repairs and which ones those frugal families have had forever that only need occasional repairs now and then.

[myfunnybunch]

I have made a note to create a personal finance class for my sons in high school.

 

Funny, I was thinking of this thread this morning, and I told ds this very same thing while we were on our morning walk, that I will be planning a personal finance class for high school.

[HS Mom in NC]

That can be a con verses a new car too though.  I bought new for my first car because I did not have good credit.  They told me if I buy new the interest rate is capped.  If I buy used there was NO cap on the interest rate.  So I could have potentially paid much more for a used car.

 

I'm not talking about financing a used car.  I'm talking about buying a used car for outright.

 

[Lady Florida.]

How long ago was this?  Prices have changed.  Drastically.  They no longer give the discount to adults or anyone who is not a homeschool student.  Homeschool student prices have gone up too.  $163 for a 2 day non-hopper pass each and up to $281 for a 5 day non-hopper pass.  And that is the discounted student, the parent price is more than that.  

 

The last two years, since they have changed the pricing, we have opted to not go.  Last year we did Universal instead.

 

And they just went up again. It's crazy.

 

http://www.fool.com/investing/general/2016/03/23/another-theme-park-jacks-up-its-prices.aspx

 

As locals who get Florida resident prices on tickets and season passes, we usually have to decide year to year if it's worth it.  If we do season passes we either have to choose Disney or Universal but not both in the same year. Having lived here since before any of the parks opened, even Magic Kingdom, I have a hard time imagining how families far from Florida manage. I know they do obviously, but when I think of what it must cost for travel and food, and lodging AND tickets, it just floors me. 

[SparklyUnicorn]

I'm not talking about financing a used car.  I'm talking about buying a used car for outright.

 

 

Yeah but being I had just graduated from college I wasn't exactly swimming in money. 

 

Sure some people can swing that, but a lot cannot.  And you can't get a job without transportation and no transportation without a job. 

[Murphy101]

Neither I nor dh nor our kids have ever in our lives been to any Disney park.

I don't see that changing in the next decade or so.

Dh would love to be able to afford to take the family.

Personally I think somewhere like Disney sounds like purposely visiting an inner circle of hell, so I'm not feeling too much pressure about it.

[marbel]

No one ever claimed a repair would never be needed.  Or a major repair.  I don't know where you got the idea that I'm unaware of that.  That's what the $1000 minimum emergency fund and then the 3-6 months worth of expenses savings is for.  For the occasional.  However, people who do their homework can see that some vehicles have much worse repair records than others.  If you choose to buy a car that is more likely to have repairs then you should plan accordingly by having additional savings beyond the general guidelines because you know darn well it's more likely to happen.  If you buy a car without doing that kind of homework, you're choosing to gamble and gambling rarely pays off.

 

 

This is all fine, but often people with low incomes are not able to be too choosy about which car they buy.  They may have access to good consumer resources but they will buy the car they can afford at the time they need it, regardless of its repair record.  Just another way things are more difficult for people with low incomes.  

 

[Scarlett]

But what level? Here they ding you for even minor things that an almost brand new car could have issues with.

I never experienced that. Even when there were inspections in my previous state. Like what kind of things?

[Scarlett]

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.

I bought a Honda Civic new in 91 for 10k. I drove it for 11 years. It neded nothing except oil change and brake jobs which Xh did himself for like $40. I LOVED that car. Xh made me sell it and after 11 years I still got 2500 out of it.

 

I imagine that same car now would be 20k but I would do that deal again. It was totally worth it.

[Scarlett]

And they just went up again. It's crazy.

 

http://www.fool.com/investing/general/2016/03/23/another-theme-park-jacks-up-its-prices.aspx

 

As locals who get Florida resident prices on tickets and season passes, we usually have to decide year to year if it's worth it. If we do season passes we either have to choose Disney or Universal but not both in the same year. Having lived here since before any of the parks opened, even Magic Kingdom, I have a hard time imagining how families far from Florida manage. I know they do obviously, but when I think of what it must cost for travel and food, and lodging AND tickets, it just floors me.

Xh and I took Ds in 09 and it was a 5k trip. We flew though.

[Seasider]

Yeah but being I had just graduated from college I wasn't exactly swimming in money.

 

Sure some people can swing that, but a lot cannot. And you can't get a job without transportation and no transportation without a job.

Sometimes it's a matter of getting a monthly payment amount in the right range to start operating on a budget so that you are able to build savings. This is why auto leases are very attractive to young folks just out of college. And 30 year mortgages.

[HS Mom in NC]

This is all fine, but often people with low incomes are not able to be too choosy about which car they buy.  They may have access to good consumer resources but they will buy the car they can afford at the time they need it, regardless of its repair record.  Just another way things are more difficult for people with low incomes.  

 

 

The article and this discussion are about the middle class Americans. 

[lauraw4321]

So, here's my question. We have fairly sizable 401Ks. At the moment it's about double DH's annual salary (we're in our 30s). We max out employer matching (resulting in a contribution of ~16% of our income). We have had savings, but they have been exhausted by unavoidable home repairs and buying a used van. We've been without debt, but then we've had several major expenses hit at one time (2 AC units totally $14K) that we financed with no interest, and a few others that are on a credit card. I could stop 401K contributions and try to build up the 3-6 month cushion. But I'm getting an incredible return on that money (because of employer matching, never mind return on investment), so instead I skate along with about $4K in savings, $2K in credit card debt, $7K in interest-free debt. I figure if I ever had to pay for something in cash and couldn't finance it no interest, we could borrow from our 401K. It would have to be a pretty crazy thing (certainly NOT a wedding for our daughters), and only if we were facing bankruptcy or extremely high interest rate to borrow it otherwise. 

 

Am I financially stupid?

[HS Mom in NC]

Sometimes it's a matter of getting a monthly payment amount in the right range to start operating on a budget so that you are able to build savings. This is why auto leases are very attractive to young folks just out of college. And 30 year mortgages.

 

Yeah, but a car for transportation to work is much more of an immediate need than buying a house. Most people justify it by saying they need a lower monthly payment but they're usually buying lots of square footage and upgrades compared to what families bought a generation or two ago.  If they would buy less house with that 15 year mortgage that had the same monthly payment it would be fine. 

 

Most people buy houses where:

their kids each have their own bedroom-that was unheard of a couple of generations ago

they have 3 eating areas that requires more square footage.  No one needs a breakfast area off the kitchen, an eat in island and a dining room. 

they have a familyroom +a livingroom which isn't necessary and some have lofts and dens too

they have more bathrooms per person than their parents and grandparents ever had

 

All of those things are neutral in and of themselves, but they're not essential and not worth ruining your finances over if you can't truly afford them.  Committing that much interest on a mortgage loan over the span of decades is a bad idea.  Better to finish in a very modest starter home and have savings and retirement too than more house than you can truly afford.  Most of middle class America is stuck in a bad financial situation because of their house, their college loans, their vehicles and their lifestyle stuff. That's what this article is about after all.  The 30 year mortgage is usually the biggest chunk of that and it's the hardest to get rid of.  Better to avoid all the predictable trouble with it by keeping it lean and short.

[Guest]

So, here's my question. We have fairly sizable 401Ks. At the moment it's about double DH's annual salary (we're in our 30s). We max out employer matching (resulting in a contribution of ~16% of our income). We have had savings, but they have been exhausted by unavoidable home repairs and buying a used van. We've been without debt, but then we've had several major expenses hit at one time (2 AC units totally $14K) that we financed with no interest, and a few others that are on a credit card. I could stop 401K contributions and try to build up the 3-6 month cushion. But I'm getting an incredible return on that money (because of employer matching, never mind return on investment), so instead I skate along with about $4K in savings, $2K in credit card debt, $7K in interest-free debt. I figure if I ever had to pay for something in cash and couldn't finance it no interest, we could borrow from our 401K. It would have to be a pretty crazy thing (certainly NOT a wedding for our daughters), and only if we were facing bankruptcy or extremely high interest rate to borrow it otherwise.

 

Am I financially stupid?

Your thinking towards the end of your post is probably the way I would think it through, too. I wonder, though, if it would be an acceptable solution to go non-max contribution for some period of time, in order to divert fund to the credit card debt? Personally, I abhor credit card debt and will make almost any sacrifice to make it disappear, knowing that I will not at all charge the card back up. But paying interest makes me insane. I would want that debt gone.

[marbel]

Sometimes it's a matter of getting a monthly payment amount in the right range to start operating on a budget so that you are able to build savings. This is why auto leases are very attractive to young folks just out of college. And 30 year mortgages.

 

Yes.  And people can always pay additional principal as they are able, and perhaps refinance later when they can manage a larger payment - if they don't sell the house first.

 

[Bluegoat]

You know what irks me to no end?  When my husband goes on business trips (not often, but yes he has) the company makes him pay for everything up front out of his pocket.  So airline tickets, hotel, etc.  They reimburse.  This makes me mad.  Ultimately it turned out ok, but for many years we didn't use credit cards.  You can't really do this without that.  The process of getting your money back is also very convoluted so if that's not 100% right there are delays.  Delays can mean interest making it more expensive. 

 

Since it is very infrequent it's not a hill to die on, but if it were this could be a major problem. 

 

My husbands work does this, or used to, and it drove me up the wall.  Sometimes it could really leave us short, or we would get weird money in the bank account that I wasn't supposed to spend.

 

I could never figure out what that should be in any way our responsibility.

[Scarlett]

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.

 

LOL

[SKL]

No, the internet hasn't been around that long, but Consumer Reports has been around a long time and so have local mechanics.  Back in the day people went to their local library and looked up the car ratings in back issues or they borrowed it from Grampa or someone else who had a subscription because he was frugal or they talked to their mechanic because that's who knows which cars will cost you a fortune in repairs and which ones those frugal families have had forever that only need occasional repairs now and then.

 

Yeah, like I said, a lot more complicated than the quick google you can do today.  Plus, just because a car model is low-maintenance on average, that doesn't mean the particular used car you're being offered is.  Even if you have a warranty or other recourse, it's still a pain to deal with it.

[Scarlett]

Yeah, but a car for transportation to work is much more of an immediate need than buying a house. Most people justify it by saying they need a lower monthly payment but they're usually buying lots of square footage and upgrades compared to what families bought a generation or two ago. If they would buy less house with that 15 year mortgage that had the same monthly payment it would be fine.

 

Most people buy houses where:

their kids each have their own bedroom-that was unheard of a couple of generations ago

they have 3 eating areas that requires more square footage. No one needs a breakfast area off the kitchen, an eat in island and a dining room.

they have a familyroom +a livingroom which isn't necessary and some have lofts and dens too

they have more bathrooms per person than their parents and grandparents ever had

 

All of those things are neutral in and of themselves, but they're not essential and not worth ruining your finances over if you can't truly afford them. Committing that much interest on a mortgage loan over the span of decades is a bad idea. Better to finish in a very modest starter home and have savings and retirement too than more house than you can truly afford. Most of middle class America is stuck in a bad financial situation because of their house, their college loans, their vehicles and their lifestyle stuff. That's what this article is about after all. The 30 year mortgage is usually the biggest chunk of that and it's the hardest to get rid of. Better to avoid all the predictable trouble with it by keeping it lean and short.

Long before I heard of DR I had figured out a 30 year mortgage was nuts. For me any way. My thinking and decision was that if I had to go 30 years I really couldn't afford the house. There are exceptions of course.....like my SIL who bought a house on 30 year mortgage and her payment to were about the same as her public housing rent.

 

For the most part people are over buying houses.

 

And it is difficult to remember that when we seem to be the only ones not living in fancy houses.

 

To be honest though most of my close friends are living similar to us house wise.

[TranquilMind]

Well, he undermined his argument when he drained his 401K to pay for his daughter's wedding. That's a pretty unhinged/idiotic/crazy thing to do, in my opinion.

 

But outside of that particular item, I think the article resonated with a lot of people trying their best to stay afloat. What a sad state of affairs.

 

 

Agree.   If you can't pay for the fancy wedding, you just don't get one.

 

We paid for our own.  I can't even imagine parents offering to do this.  

[hornblower]

I cannot imagine living that close to the line. We have really never been that close. 
 

The only thing I'm ok with going into debt for is housing (& that has to be considered increasingly carefully, esp in our area where our real estate bubble has yet to pop) 

No student loans, no car loans, and I've told my kids that if even once they carry a balance on a credit card, they need to cut their cards up and go to cash only. 

Babies, drugs, drunk driving, and debt  - I teach my kids those are all things that will derail your life. 

[SparklyUnicorn]

I never experienced that. Even when there were inspections in my previous state. Like what kind of things?

 

I'll see if I can find the list of things.

 

One dinged me for having a slightly stiff emergency break.  It's because I never use it.  Another for wipers (at least wipers aren't too expensive, but the wipers were not old).

 

What I also do not like is the fact that the inspections are done at car repair shops.  Guess who'd love to repair your car?

[TranquilMind]

Long before I heard of DR I had figured out a 30 year mortgage was nuts. For me any way. My thinking and decision was that if I had to go 30 years I really couldn't afford the house. There are exceptions of course.....like my SIL who bought a house on 30 year mortgage and her payment to were about the same as her public housing rent.

 

For the most part people are over buying houses.

 

And it is difficult to remember that when we seem to be the only ones not living in fancy houses.

 

To be honest though most of my close friends are living similar to us house wise.

 

We have and have always had a very average house.  We've watched those peers (academically, professionally) in the mansions rise and fall. 

The good news is that the lower end houses will ALWAYS sell fast, if you need to sell.  Not so true in the higher price ranges. 

 

 

[Bluegoat]

Yeah, but a car for transportation to work is much more of an immediate need than buying a house. Most people justify it by saying they need a lower monthly payment but they're usually buying lots of square footage and upgrades compared to what families bought a generation or two ago.  If they would buy less house with that 15 year mortgage that had the same monthly payment it would be fine. 

 

Most people buy houses where:

their kids each have their own bedroom-that was unheard of a couple of generations ago

they have 3 eating areas that requires more square footage.  No one needs a breakfast area off the kitchen, an eat in island and a dining room. 

they have a familyroom +a livingroom which isn't necessary and some have lofts and dens too

they have more bathrooms per person than their parents and grandparents ever had

 

All of those things are neutral in and of themselves, but they're not essential and not worth ruining your finances over if you can't truly afford them.  Committing that much interest on a mortgage loan over the span of decades is a bad idea.  Better to finish in a very modest starter home and have savings and retirement too than more house than you can truly afford.  Most of middle class America is stuck in a bad financial situation because of their house, their college loans, their vehicles and their lifestyle stuff. That's what this article is about after all.  The 30 year mortgage is usually the biggest chunk of that and it's the hardest to get rid of.  Better to avoid all the predictable trouble with it by keeping it lean and short.

 

I really notice those things as well, and I think they are a good example of items that people really do think are necessities for living.  That, for example, having their kids share is really inadaquate parenting somehow. 

 

I also find it interesting that when I was looking at standard house plans, in order to avoid some of those things (three full bathrooms or all bedrooms with giant closets) I had to look at the "cottage" section.

[TranquilMind]

I cannot imagine living that close to the line. We have really never been that close. 

 

The only thing I'm ok with going into debt for is housing (& that has to be considered increasingly carefully, esp in our area where our real estate bubble has yet to pop) 

 

No student loans, no car loans, and I've told my kids that if even once they carry a balance on a credit card, they need to cut their cards up and go to cash only. 

 

Babies, drugs, drunk driving, and debt  - I teach my kids those are all things that will derail your life. 

 

I'd add one thing to your list of things that will trash your life;  bad relationships.

 

Choice of a spouse is so very important in so many ways, including financially. 

 

[Bluegoat]

Agree.   If you can't pay for the fancy wedding, you just don't get one.

 

We paid for our own.  I can't even imagine parents offering to do this.  

 

Parents, or communities,  paying for weddings is pretty traditional, in most cultures.

 

I think there are good reasons, and nice ones, to do it that way, though when people are older it makes sense to pay themselves.  The real problem is the unrealistic expectations for what the wedding will be like.

[SparklyUnicorn]

I really dislike the term "shame" in this case though.  I mean come on.  I don't see it as a moral failing.  Maybe it is not ideal, but it doesn't make someone hideous IMO.

 

 

[SparklyUnicorn]

Yeah, but a car for transportation to work is much more of an immediate need than buying a house. Most people justify it by saying they need a lower monthly payment but they're usually buying lots of square footage and upgrades compared to what families bought a generation or two ago.  If they would buy less house with that 15 year mortgage that had the same monthly payment it would be fine. 

 

Most people buy houses where:

their kids each have their own bedroom-that was unheard of a couple of generations ago

they have 3 eating areas that requires more square footage.  No one needs a breakfast area off the kitchen, an eat in island and a dining room. 

they have a familyroom +a livingroom which isn't necessary and some have lofts and dens too

they have more bathrooms per person than their parents and grandparents ever had

 

All of those things are neutral in and of themselves, but they're not essential and not worth ruining your finances over if you can't truly afford them.  Committing that much interest on a mortgage loan over the span of decades is a bad idea.  Better to finish in a very modest starter home and have savings and retirement too than more house than you can truly afford.  Most of middle class America is stuck in a bad financial situation because of their house, their college loans, their vehicles and their lifestyle stuff. That's what this article is about after all.  The 30 year mortgage is usually the biggest chunk of that and it's the hardest to get rid of.  Better to avoid all the predictable trouble with it by keeping it lean and short.

 

My thinking is I don't want to clean all of that!  I found having 1 bathroom not great so I was glad to get more when we bought our house.  But I'm not happy about having to clean more bathrooms.  So one bathroom does have it's major pluses. 

 

And three eating areas!  Again, more to clean!!!

[Bluegoat]

I really dislike the term "shame" in this case though.  I mean come on.  I don't see it as a moral failing.  Maybe it is not ideal, but it doesn't make someone hideous IMO.

 

People do feel a lot of shame over financial stuff though - people are more cagy about it than their sex lives sometimes!

 

It might have meant collective shame, that's how I took it.

[SparklyUnicorn]

People do feel a lot of shame over financial stuff though - people are more cagy about it than their sex lives sometimes!

 

It might have meant collective shame, that's how I took it.

 

Yeah I guess.  But I dunno.  I don't talk money with just anyone (except in the hypothetical), but I don't think it's a huge deal.

 

I suppose I used to worry about being judged for that.  Growing up in CT I felt this attitude very strongly.  It's less obnoxious where I am now which is nice.