The Secret Shame of Middle Class Americans

[Bluegoat]

What I ran into was this exact thing. Urban living was barely financially feasible, but we would have been on top of each other. And then, "country" living was either something old and run down or huge with more than we really needed. There was precious little middle ground. And on top of that, even urban living didn't make for a shorter commute time-wise, it was slightly easier in that dh could take the train, but it didn't save time that could be spent with the family. The only urban areas that provided a time saving commute were crime ridden and impoverished or WAY out of our budget. No in between.

 

I've become fairly reconciled to living in areas some people consider "crime ridden."  It's much more subjective than I would have thought.  Some areas are obviously really dangerous, but it can be worth looking into if it's mostly hearsay or statistics - the reality of actually living there isn't always reflective.  I've found a lot of the poorer communities have some social advantages over the wealthier ones too.

[Ravin]

Yep. I was pregnant with my 4th when we had a potential landlord flat out tell us she want going to rent to us because we had too many kids. We did end up finding a run-down rental (and left it in FAR better shape than when we moved in), but that was the last time we rented. We bought from then on.

 

Did you report her sorry butt to HUD?

[Bluegoat]

Lolololololol

 

People do not rent to large families. When we were pregnant with our fourth in a 3 bdrm rental, our landlord made it clear she wouldn't be renewing if we had more. A four bdrm house here usually means the landlord is willing to rent to a couple + 3 kids. Despite leaving every place we rented better than when we moved in, landlords just presume a large family will ruin the place. It's not fair, but that's the way it is here. People just won't find a place to rent if they have more than 4 kids unless they get really lucky. Or can afford to rent a huge house.

 

We didn't buy a house until we absolutely had to. We stayed in the smallest place until family increase mandates a change. Did the same with vehicles.

 

THat doesn't seem to be an issue here.  There are rules about how many kids can share a bedroom, and it can be hard to find larger apartments than 3 bedrooms, but I have never heard of a landlord not renting to a larger family.

 

Mind you I am pretty sure that would be illegal here.

[eternalsummer]

I was pretty sure that at least in the state I lived in, landlords couldn't discriminate based on family status or number of kids.  There is a law (MO) that they can't rent to more than 2 people per bedroom; so if you have say 5 kids you must rent a 4 bedroom, which is a bit of a bummer.  Here in CO as far as I can tell there is no such law.  We have never had trouble renting with lots of kids, though we don't have pets (something they can discriminate against) and we make good $ and are willing to pay any security deposit required.

[maize]

THat doesn't seem to be an issue here. There are rules about how many kids can share a bedroom, and it can be hard to find larger apartments than 3 bedrooms, but I have never heard of a landlord not renting to a larger family.

 

Mind you I am pretty sure that would be illegal here.

It happens all the time, illegal or not.

 

Landlords don't come out and say it, but the families with multiple kids who see their applications turned down over and over and over again in spite of excellent finance, credit, and reference information know what is happening.

 

Landlords with multiple applications pick and choose, and a large family is rarely going to be their choice. It's hard to sue them over it because they can make up any reason they want for why they chose a different renter.

Edited April 22, 2016 by maize

[eternalsummer]

If I were a landlord and it were legal to discriminate based on number of kids I'd do it for sure; they are not easy on a house!  I think this must be more of a problem in an area with high rental pressure (though the last place we lived was pretty crazy - rent was 2-3x a mortgage for the same property).

[DawnM]

One of the things we are discussing on another board is the lack of good starter homes anymore.   Anything small is older.  Houses build around 1980 and newer are all larger and costlier.  

 

Builders simply don't want to build the starter homes anymore.  The only ones around here are not quality, are cookie cutter, and lack any privacy.

[Bluegoat]

It happens all the time, illegal or not.

 

Landlords don't come out and say it, but the families with multiple kids who see their applications turned down over and over and over again in spite of excellent finance, credit, and reference information know what is happening.

 

Landlords with multiple applications pick and choose, and a large family is rarely going to be their choice. It's hard to sue them over it because they can make up any reason they want for why they chose a different renter.

 

As I said, this doesn't seem to be an issue here.  This may be because at one time there were quite a few buildings that were called "adult only" and this was challenged and the regulators came down pretty hard on it.  Now it only applies to a very few special seniors apartments.

 

The main limitation here would be that if you have a lot of kids, you might exceed the number allowed per bedroom, and apartments don't tend to have more than three.  Even houses don't usually have more than four.  So if you have more than six kids or so, it could be tricky.

[Bluegoat]

One of the things we are discussing on another board is the lack of good starter homes anymore.   Anything small is older.  Houses build around 1980 and newer are all larger and costlier.  

 

Builders simply don't want to build the starter homes anymore.  The only ones around here are not quality, are cookie cutter, and lack any privacy.

 

I remember there was a move to smaller homes being built shortly after 2008, but I don't know how long that lasted.

 

A lot of the smaller homes being built where I am are condo type places, so not quite right for many families.  You have to go back to neighbourhoods from the 70s or earlier.

 

And weirdly on the other end, there aren't the same kind of really family appropriate apartments being built either.  Older ones, like my dad was in as a child, usually had walk ups with two or thee floors - there would be a shared landing for about four family sized apartments, and they would have shared outdoor space too.  The economical newer places have hundreds of units and the kids play in parking lots.  They are usually built in developments too so people can't walk into town as easily.

[December]

 

gets a 30 year mortgage (No one should get a 30 year mortgage, ever.)

 

 

 

So what if your only two options are a 30 year mortgage or paying much more per month in rent? We'd have to pay at least double what we pay for our 30 year mortgage to rent (unless maybe we crammed into a tiny house, violating occupancy codes.  Even then rent would still be more than our mortgage).  I just can't understand making blanket statements about what is best for everyone!

[prairiewindmomma]

I never thought I would choose to live in an apartment...until I moved to Europe.  The concept of apartments/condos is so different there.  They are laid out to accommodate families, and so that one can age in place. There are areas for community interaction.  I could do all of my weekly shopping within a couple of blocks of my flat.  I could easily catch a bus with a few minutes walk, or take a 15 minute walk to a subway station. 

 

I would LOVE to find something like that where I wasn't obligated to keep a lawn so that my kids had a place to play or keep two cars so that we could do shopping/doctor visits while dh is at work. I've seen a number of more urban condos going up in the communities I have lived in stateside, but nothing that could really support family living or having only one/no family car.

[EmseB]

I've become fairly reconciled to living in areas some people consider "crime ridden." It's much more subjective than I would have thought. Some areas are obviously really dangerous, but it can be worth looking into if it's mostly hearsay or statistics - the reality of actually living there isn't always reflective. I've found a lot of the poorer communities have some social advantages over the wealthier ones too.

Yes, I meant crime ridden as in actually dangerous. The not dangerous neighborhoods go up in price quickly, even if they appear "poorer". I'm not sure how that all works out, but there was some housing available with government assistance vouchers, and other similar homes in the area would be at the top of or just out of our budget. It was a very complicated search for housing, balancing commutes, size, etc.

[LisaKinVA]

Lisa, I'm going to point out that many jobs won't fit your zero cost work commute, because many jobs do not allow for the predictable hours that get you in a van pool. Aside from private jobs, there are government jobs that do not allow that predictability. Additionally, wheny dh had a government job he often was in his office 7am 7pm. Then add a commute to that. He was never in a position to flex his schedule. And never in a position to leave work earlier even if he arrived earlier. The same was true with private employers.

 

Additionally, if you are in private industry, you are less likely to get subsidies for vanpool, metro, or other mass transit. Zero cost commute is not available to everyone.

I realize it doesn't always work. I never said that it did. I was merely countering the point that it wasn't worth considering, or somehow ridiculous. Situations vary, and they change over time. Things that seem outrageous to one, can be the best overall option to another, whether that's a 90 minute commute, cashing in part of a 401k, buying a new car, or having a 30 year mortgage instead of renting. When we become too rigid in our thinking to consider possible options, we run risks of missing a bigger picture. My parents didn't want to live that far out in 1993. But, they couldn't find what they wanted anywhere close to their price range without being there. They made a choice. Granted, it was easier to deal with having spent so many years in Silicon Valley. My husband hails from very small town Arkansas, where a really long commute was considered anything over 10 minutes. But, he wound up reaching the same conclusion as my dad had 10 years earlier.

[LisaKinVA]

I've become fairly reconciled to living in areas some people consider "crime ridden." It's much more subjective than I would have thought. Some areas are obviously really dangerous, but it can be worth looking into if it's mostly hearsay or statistics - the reality of actually living there isn't always reflective. I've found a lot of the poorer communities have some social advantages over the wealthier ones too.

Most of the areas we are considering in Norfolk, many would think of as risky. But, given our limitations, and living in what is already considered a high risk area now, we are more comfortable with the idea. I haven't mentioned that someone attempted to break into our house here, have I? The police did just catch a burglary ring of 10 people here in our neighborhood last week.

[Scarlett]

I want to clarify my feelings about 30 year mortgages, I think they are a very bad idea to go 30 just so you can buy more and bigger and better. They are not a bad idea if that is the only way to get a decent modest place to live.

 

And of course ultimately everyone has to decide what is best for their situation. I have opinions.....pretty strong ones....but I acknowledge people have the right to run their own lives in different ways from me.

[luuknam]

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.

 

Rent and utilities for us are something like 15% of take-home pay. My wife sort of wants to move to San Francisco or NYC, and I told her that they'd have to pay her waaaaaay too much. On paper, we could maybe do it on twice her current salary, but if you add in a bunch of other factors, we'd need about thrice her current salary. For example, if she loses her job here, one of us could get just about any crappy job and we could stay afloat for quite a while because our rent (incl water) is only $550. If we were to move to San Francisco, we'd need a MUCH larger emergency fund, because if she were to lose her job there, we'd have a much higher burn rate - a minimum wage job there would not be able to keep us afloat for a while the way it would here. Add in the thing about earthquakes and water shortages and maybe some other things I'm forgetting, and someone would have to pay her three times what she's currently being paid in order for me to be willing to relocate to SF.

 

I keep hearing stuff about jobs being in HCOL areas, but employers in places like Buffalo, NY, have trouble finding qualified employees willing to move here. My wife doesn't even have a college degree (nor did she have work experience in her current field), and her employer paid our moving expenses to move here.

 

I want to clarify my feelings about 30 year mortgages, I think they are a very bad idea to go 30 just so you can buy more and bigger and better. They are not a bad idea if that is the only way to get a decent modest place to live.

 

When my (blue collar) grandparents bought a house with 5 bedrooms (though probably still significantly smaller than the average new American house) on a 30 year mortgage (while pregnant with baby #3, iirc - they were living in a bunker before buying the house), everybody thought they were insane, that they were getting too much house, etc. In the end, it worked out for them very well. They ended up with 7 kids, lived in that house until they died, etc. They had a big garden they grew vegetables in, kept bees and chickens, etc. Their children got music lessons as kids, and some of them went to university. When I was a kid they added a 2nd toilet to the house, and even built a guest house in the backyard (my grandfather was a carpenter). If they'd bought a smaller/cheaper house, they'd have had to move over time, which comes with costs. (starting the garden over? with bees and chickens? etc?).

 

If it weren't for protectionist measures (people not from the island/not having a job on the island can't buy a house on the island - it's a bit too extreme, as their son wanted to buy their house at some point and wasn't allowed to because his job wasn't on the island and he'd moved to the mainland years before, even though he grew up on the island) their house would've been worth a ton when they died (it was still worth a good amount of money).

[ChocolateReignRemix]

I want to clarify my feelings about 30 year mortgages, I think they are a very bad idea to go 30 just so you can buy more and bigger and better. They are not a bad idea if that is the only way to get a decent modest place to live.

 

And again, 30 year mortgages make sense in a lot of scenarios.  Also, if someone is planning to stay in a home for a long time, going with bigger and better can make a lot of sense as well.

[Guest]

Where is this 25% of pay thing come from?

 

Wherever it is, the military did not get the memo :laugh: Someone please enlighten them Kthanks.

 

In some places more than others (since housing allowance is both rank and location-dependent).

[Scarlett]

And again, 30 year mortgages make sense in a lot of scenarios. Also, if someone is planning to stay in a home for a long time, going with bigger and better can make a lot of sense as well.

Not if they can barely afford it. IMO of course. Ymmv.

[Scarlett]

Where is this 25% of pay thing come from?

 

Wherever it is, the military did not get the memo :laugh: Someone please enlighten them Kthanks.

 

In some places more than others (since housing allowance is both rank and location-dependent).

25% of net pay for house payment or rent is Dave Ramsey's opinion. I don't know how people survive when paying almost 50% of net toward rent/mortgage. Maybe they have other benefits that aren't being factored in.

[ChocolateReignRemix]

Not if they can barely afford it. IMO of course. Ymmv.

 

But whether the mortgage is 30 year or 15 year isn't the issue in that case.  In general, a 30 year will be more affordable.  As discussed above, sometimes taking a 30 year and keeping cash flow higher when younger makes financial sense when factoring in the tax deduction and the long term benefit of investing the difference at a younger age.  Which is why the statements made in this thread that 30 year mortgages are a mistake are nonsense.

[ChocolateReignRemix]

Where is this 25% of pay thing come from?

 

Wherever it is, the military did not get the memo :laugh: Someone please enlighten them Kthanks.

 

In some places more than others (since housing allowance is both rank and location-dependent).

 

I think are more standard number is more often 30% pretax.  Ramsey and his ilk have pushed a much lower number for sometime, but Ramsey's advice is extremely conservative and often ignores the time value of money and the value of investing from a young age.

[Seasider]

But whether the mortgage is 30 year or 15 year isn't the issue in that case. In general, a 30 year will be more affordable. As discussed above, sometimes taking a 30 year and keeping cash flow higher when younger makes financial sense when factoring in the tax deduction and the long term benefit of investing the difference at a younger age. Which is why the statements made in this thread that 30 year mortgages are a mistake are nonsense.

And I'll say it one more time....monthly cash flow is a big factor. People can often get below that magic 25% mentioned above by taking a 30 versus 15 year mortgage. It can be paid off early if the funds are available.

[ChocolateReignRemix]

And I'll say it one more time....monthly cash flow is a big factor. People can often get below that magic 25% mentioned above by taking a 30 versus 15 year mortgage. It can be paid off early if the funds are available.

 

Exactly.  We had a 30 year that we paid off early as our income increased, but by taking the 30 year/lower payment early on we never missed out maxing out our retirement accounts.

[Seasider]

I think are more standard number is more often 30% pretax. Ramsey and his ilk have pushed a much lower number for sometime, but Ramsey's advice is extremely conservative and often ignores the time value of money and the value of investing from a young age.

Ramsey is all over the time value of money when it comes to investing. He just happens to be totally debt averse. Seriously, it would be lovely to never take on debt, but that's not always feasible. What is possible and often downright necessary is leveraging debt to one's advantage [eta as you did!].

Edited April 25, 2016 by Seasider

[ChocolateReignRemix]

Ramsey is all over the time value of money when it comes to investing. He just happens to be totally debt averse. Seriously, it would be lovely to never take on debt, but that's not always feasible. What is possible and often downright necessary is leveraging debt to one's advantage [eta as you did!].

 

That is my issue with Ramsey - he understates the importance of leveraging debt wisely at a young age.

[Scarlett]

That is my issue with Ramsey - he understates the importance of leveraging debt wisely at a young age.

 

 

My personal feelings is it is never wise to leverage debt.  Sometimes necessary, and sometimes it pays off big.  But for me...with my conservative, non gambling sense, it is never wise.  And I think other people who may feel like I do need to hear that voice...that they don't have to go the standard route of doing things.  They can be more cautious and take on less debt.

[ChocolateReignRemix]

My personal feelings is it is never wise to leverage debt.  Sometimes necessary, and sometimes it pays off big.  But for me...with my conservative, non gambling sense, it is never wise.  And I think other people who may feel like I do need to hear that voice...that they don't have to go the standard route of doing things.  They can be more cautious and take on less debt.

 

No one here has said not to take on less debt.  We have explained to some who are making firm statements about why 30 year mortgages are always "wrong" why that is not always correct.  It is fine to not want to carry more debt, but in many cases the math shows why that is just an opinion and why it can be fiscally responsible to start out with a longer mortgage.

[creekland]

That is my issue with Ramsey - he understates the importance of leveraging debt wisely at a young age.

 

Ditto!  We had our kids do DR's Personal Finance course, but we were there with them explaining reality for parts of it (like with cars) and were able to show them our positive experiences from wisely leveraging debt.  I can't even fathom where we'd be if we hadn't "gambled" a little.  

 

At the moment, all three of ours are pretty darn good with money.

 

Everyone has to do what they feel is best.  We've lost some on investments too - lot a bit during the economic downturn - and that's not coming back as we had to cash out to keep some income coming in when hubby's business was slow, but overall, we're still very ahead of where we would have been.  We wouldn't have been able to keep our house/business/some extras if we hadn't had those investments to cash out TBH.

 

Low interest car loans (when needed) and low interest mortgage loans are extremely helpful for many.

[Joyofsixreboot]

Rural America has lots of problems but this thread has dh and I reconsidering our planned retirement move to a more urban area. On the bright side we have sav d little bits that have added up and dh has a 401k. Our best move has been to always buy beater cars so no loan and our house is nothing special but paid for. From the outside I suspect we actually look like we are struggling but savings aren't flashy.

Edited April 25, 2016 by joyofsix

[DawnM]

But whether the mortgage is 30 year or 15 year isn't the issue in that case.  In general, a 30 year will be more affordable.  As discussed above, sometimes taking a 30 year and keeping cash flow higher when younger makes financial sense when factoring in the tax deduction and the long term benefit of investing the difference at a younger age.  Which is why the statements made in this thread that 30 year mortgages are a mistake are nonsense.

 

I think that is a key factor too.  A 25 year old taking out a 30 year mortgage would be different than a 50 year old taking out a 30 year.

[DawnM]

I have reread the article with a bit more attention to detail.....or lack thereof.  He is very vague about how much he makes and how much it costs to do X or Y, which he went into debt over.

 

The rule still applies, if you spend more than you make, you go into debt.  Period.

 

He talks about his work taking longer than expected, which means he counted on money before it could be available instead of waiting for the money first.  He talks about buying more than he could afford and having a hard time selling.  Now, I DO understand the market downturn, but I also understand that there was an era where people bought WAY more than they reasonably should have.  He bought more than he should have.

 

He starts with:

 

I never wanted to keep up with the Joneses. But, like many Americans, I wanted my children to keep up with the Joneses’ children, because I knew how easily my girls could be marginalized in a society where nearly all the rewards go to a small, well-educated elite. (All right, I wanted them to be winners.)

 

And he goes on with:

 

And then, on top of it all, came the biggest shock, though one not unanticipated: college. Because I made too much money for the girls to get more than meager scholarships, but too little money to afford to pay for their educations in full, and because—another choice—we believed they had earned the right to attend good universities, universities of their choice, we found ourselves in a financial vortex.

 

​He asserts that the issue is stagnating salaries, but that SHOULD mean changes in the way we spend, shouldn't it?  You make $100K?  In the year 2000 you were able to eat out every week, go golfing, pay for private school for the kids, etc.....

 

Now in 2016 your salary is still $100K, but now your kids want to go to COLLEGE, which is far more than private school tuition, because you have told them they can go to the college of their choice and you will pay for it.  Eating out has gone up by 50% as well as several of your bills, like gas for the car, electricity for the house, etc.....

 

Please don't think I am picking on anyone here, this is directed at the author.

 

YES, the middle class is making less, but that does mean our spending habits need to change.  Believe me, ours have.  

Edited April 25, 2016 by DawnM

[Bluegoat]

Dave Ramseys issues with debt aren't just practical, they are theological - so I'm not sure it's reasonable to take them as if they were purely advice about how to get ahead in our financial system.  They seem to be essentially based on a view that says our financial system is broken and/or immoral, which isn't an odd or unusual religious perspective on money and its use.

 

That being said, I don't think its ever fair to take any kind of general advice like that found in popular books and treat it as if it is meant to apply to every individual situation.  I doubt D.R. would advise people to do something really stupid to avoid debt when their situation offered none of the preferred options.

 

I do think though when there begin to be many people who need to pay significantly more than 25 or 30% on their housing needs, or where payment plans become very stretched out, it is going to cause trouble.  Lots of people think "well I can always pay it off early" but I think people getting into trouble by taking on too much debt is far more common than people paying things off early.

[creekland]

Dave Ramseys issues with debt aren't just practical, they are theological - so I'm not sure it's reasonable to take them as if they were purely advice about how to get ahead in our financial system.  They seem to be essentially based on a view that says our financial system is broken and/or immoral, which isn't an odd or unusual religious perspective on money and its use.

 

Perhaps it's some sort of theological system, but that's another area where our family disagrees with him. 

 

DR seems to be all about "getting the deal" for the buyer/reader/himself.  Sometimes life shouldn't be all about getting the deal (aka taking advantage of people when they are down and need to sell or get a job, etc).  The theological belief we follow is all about doing the best we can for all parties involved.  Many times this isn't by getting things as inexpensively as possible, but being willing to pay a fair price when one is able (as he is with his millions), not talking about how the buyer is in the position to bargain with a desperate seller.

 

There are many choices we make that cost us more than we could be spending (from tips to places we choose to shop or eat or how much we pay those working for us).  I like to think God is pleased with our decisions.  I doubt he's pleased when we (general we) "bargain" to get that cheap deal from a person desperate to get money or a job.  The Holy Book I read talks many times about how humans should be mindful of others rather than out for ourselves.

 

It's a far bigger picture than DR presents.  There are many things to consider IRL.  Many lower income folks would be far better off if more people weren't so concerned about "getting what they can" and learning tricks to do it.

 

[DawnM]

His dream has to change. He cant afford the popular colleges. His children can work and then pay their own way, or they can go to a SUNY school with the doctors' children, which would cost him less than private school, unless they must be sorority members.

 

What is a SUNY school?

[CinV]

What is a SUNY school?

 

State Universities of New York (aka - state schools)

[DawnM]

State Universities of New York (aka - state schools)

 

Ah, yes, and I agree.  We are encouraging ours to go to local state schools and live at home......many think we are *limiting* them, but we aren't MAKING them do anything.  We are telling them that they can attend the local state 4 year school on our dime, but that is all we can afford.  If they want to go elsewhere, they can pay the difference.  

[daijobu]

 

 

And then, on top of it all, came the biggest shock, though one not unanticipated: college. 

 

Another thing I was curious about was the ROI of attending Stanford, particularly if you intend to go to med school.  If your goal is to enter private practice, then I think the right strategy is to minimize your undergrad and medical school costs (state schools all the way).  Now, if his daughter intends to go into academia, then maybe Stanford and Harvard was a good choice.  Maybe.  

 

OTOH if she were wanting to study engineering and create professional networks in Silicon Valley, then she would have made a good choice, although frankly, there are plenty of software engineers working here who attended state schools (imagine!).  

 

It's hard to say no to a school like Stanford, but like all other colleges, there's really nothing magical about it.

 

I'm not familiar with Emory, but if it charges private school tuition, then that seems like overkill for someone going into social work, as a PP mentioned a few pages back.  

 

This assumes his daughters knew what they wanted to be before entering college, which makes all these decisions much easier.  

[Arcadia]

Well, I guess it depends. I just ran the numbers for a salary of $100,000. I would consider that well off. A 15 year mortgage at 25% of their take home would allow for $200,000 home purchase. (That's not including taxes, insurance, or PMI in their mortgage.) For $200000 they could have a 1 bed 780 sqft condo. But it has $389 in HOA fees, but does include 1 parking spot.

Less than $100k annual, 1 bedroom condo bought for $400k, same floor plan same complex many selling for >$600k this year. HOA is $386 but no PMI. Insurance is about $300, Tax is $5.6K. Our $380k mortgage is for 30 years but we can pay off in 10 years. We just downpay $2k-5k monthly once we hit what we want our minimum emergency fund to be. All performance bonus my hubby had went to downpayment.

[DawnM]

Another thing I was curious about was the ROI of attending Stanford, particularly if you intend to go to med school.  If your goal is to enter private practice, then I think the right strategy is to minimize your undergrad and medical school costs (state schools all the way).  Now, if his daughter intends to go into academia, then maybe Stanford and Harvard was a good choice.  Maybe.  

 

OTOH if she were wanting to study engineering and create professional networks in Silicon Valley, then she would have made a good choice, although frankly, there are plenty of software engineers working here who attended state schools (imagine!).  

 

It's hard to say no to a school like Stanford, but like all other colleges, there's really nothing magical about it.

 

I'm not familiar with Emory, but if it charges private school tuition, then that seems like overkill for someone going into social work, as a PP mentioned a few pages back.  

 

This assumes his daughters knew what they wanted to be before entering college, which makes all these decisions much easier.  

 

There are other choices for medical school.  Heck, my father went to Univ. of Oregon for Med school, lived with his parents, and paid cash by working in the summers on a farm.  His parents contributed some as well.  They weren't wealthy, but they were good with their money.  The cost was under $2,500/year but the average salary in 1960 was $5,300.

 

And Emory for a Social Work degree was not wise given their financial situation.  Again, they wanted their kids to keep up with the Joneses' when they couldn't afford it.  BTW:  Emory is $45,700 JUST for tuition!  Room, board, and books add around $15,000 more for a total of almost $61,000 per year.  She may have gotten some scholarships, but they still couldn't afford it.

 

I would love to see that final bill for 2 kids to go to elite schools, even with the scholarships.  

 

And yes, I agree with you, certain schools for certain fields can be important, but for the majority of careers, like social work, the name on your diploma just doesn't matter that much.

[daijobu]

My math teacher's son wanted to attend med school.  Math teachers don't exactly make the big bucks, so his son went to Univ. of Iowa undergrad and for med school, probably paying next to nothing (this is in the 80s and 90s).  I don't keep in touch, but I imagine he's living a comfortable upper middle class lifestyle in some medium sized midwestern city.  Math teacher is comfortably retired.

 

I'm finding many people I read about or I know IRL rely on their own parents to help with things like house downpayments, school tuition, and emergency expenses.  Maybe our parents were better with their money, but I think our decline in real wages (and the absence of union protections and pensions) are the real reason.  But will we folks in our generation have the money to help the next generation?  

[Seasider]

Perhaps it's some sort of theological system, but that's another area where our family disagrees with him.

 

DR seems to be all about "getting the deal" for the buyer/reader/himself. Sometimes life shouldn't be all about getting the deal (aka taking advantage of people when they are down and need to sell or get a job, etc). The theological belief we follow is all about doing the best we can for all parties involved. Many times this isn't by getting things as inexpensively as possible, but being willing to pay a fair price when one is able (as he is with his millions), not talking about how the buyer is in the position to bargain with a desperate seller.

 

There are many choices we make that cost us more than we could be spending (from tips to places we choose to shop or eat or how much we pay those working for us). I like to think God is pleased with our decisions. I doubt he's pleased when we (general we) "bargain" to get that cheap deal from a person desperate to get money or a job. The Holy Book I read talks many times about how humans should be mindful of others rather than out for ourselves.

 

It's a far bigger picture than DR presents. There are many things to consider IRL. Many lower income folks would be far better off if more people weren't so concerned about "getting what they can" and learning tricks to do it.

 

Wow, that is an excellent observation.

[Bluegoat]

Perhaps it's some sort of theological system, but that's another area where our family disagrees with him. 

 

DR seems to be all about "getting the deal" for the buyer/reader/himself.  Sometimes life shouldn't be all about getting the deal (aka taking advantage of people when they are down and need to sell or get a job, etc).  The theological belief we follow is all about doing the best we can for all parties involved.  Many times this isn't by getting things as inexpensively as possible, but being willing to pay a fair price when one is able (as he is with his millions), not talking about how the buyer is in the position to bargain with a desperate seller.

 

There are many choices we make that cost us more than we could be spending (from tips to places we choose to shop or eat or how much we pay those working for us).  I like to think God is pleased with our decisions.  I doubt he's pleased when we (general we) "bargain" to get that cheap deal from a person desperate to get money or a job.  The Holy Book I read talks many times about how humans should be mindful of others rather than out for ourselves.

 

It's a far bigger picture than DR presents.  There are many things to consider IRL.  Many lower income folks would be far better off if more people weren't so concerned about "getting what they can" and learning tricks to do it.

 

 

Yes, I think you are right about this.  I would go so far as to say that I think his financial theology is incoherent, but then I come out of a rather different tradition that he does, and I find a lot of his perspective incoherent.

 

So far as aversion to debt, I think his views come in part from concerns about usury.  So to try and understand his advice would have to take into account why he, or anyone, might have concerns about usury.

[BooksandBoys]

My math teacher's son wanted to attend med school. Math teachers don't exactly make the big bucks, so his son went to Univ. of Iowa undergrad and for med school, probably paying next to nothing (this is in the 80s and 90s). I don't keep in touch, but I imagine he's living a comfortable upper middle class lifestyle in some medium sized midwestern city. Math teacher is comfortably retired.

 

I'm finding many people I read about or I know IRL rely on their own parents to help with things like house downpayments, school tuition, and emergency expenses. Maybe our parents were better with their money, but I think our decline in real wages (and the absence of union protections and pensions) are the real reason. But will we folks in our generation have the money to help the next generation?

I think the answer to that is no.

Most of my friends receive regular assistance from their parents (I'm in my mid 30s, so we are talking established adults with children). In some cases, that assistance even comes in the form of a monthly stipend of several thousand dollars a month. I live in a higher COL area, so it's tough here (we are probably leaving because we aren't earning enough and don't get stipends from our parents. Not that I would ever WANT that). I certainly understand why people need the regular help. But, if we can't pay for our own bills, how on earth will we ever help our kids?

 

I look at our own student loan situation (husband's, not mine. He did as he was told and went to his "dream school" and has the debt to show for it) and if we don't make some major changes now, we'll still be paying those when our youngest starts college! Even on our "move to a low COL area and pay those loans off as fast as humanly possible" plan, we will have only paid them off a few years before our oldest starts college. Our retirement is laughable. Housing prices keep going up. At this point, I think the best option I have for helping my adult children is to teach them to avoid debt and to be willing to let them live at home as long as they want to save their money. I'm not complaining. Adulthood is about making choices and I'm happy to make the hard choices. But the reality of education and housing a this point in time is very different than it was 50 years ago.

[FaithManor]

THat doesn't seem to be an issue here.  There are rules about how many kids can share a bedroom, and it can be hard to find larger apartments than 3 bedrooms, but I have never heard of a landlord not renting to a larger family.

 

Mind you I am pretty sure that would be illegal here.

While it may be illegal in some states, where are there are more than one applicant for a unit or house, there are options. In our area landlords do not rent to large families. Everyone knows it. But, the landlords do not have to state it because they have so many applicants for each house and apartment, that they simply choose "someone else", and they are not obligated to state why they do so. "We had numerous applications, and I am sorry to say you were not chosen."

 

So the discrimination persists. Now that said, when it comes to apartment complexes there are zoning codes limiting the number per unit and the maximum per building so that legally does limit the landlord anyway. If memory serves, many three bedroom apartments around here have a five person maximum.

[Bluegoat]

I have reread the article with a bit more attention to detail.....or lack thereof.  He is very vague about how much he makes and how much it costs to do X or Y, which he went into debt over.

 

The rule still applies, if you spend more than you make, you go into debt.  Period.

 

He talks about his work taking longer than expected, which means he counted on money before it could be available instead of waiting for the money first.  He talks about buying more than he could afford and having a hard time selling.  Now, I DO understand the market downturn, but I also understand that there was an era where people bought WAY more than they reasonably should have.  He bought more than he should have.

 

He starts with:

 

I never wanted to keep up with the Joneses. But, like many Americans, I wanted my children to keep up with the Joneses’ children, because I knew how easily my girls could be marginalized in a society where nearly all the rewards go to a small, well-educated elite. (All right, I wanted them to be winners.)

 

And he goes on with:

 

And then, on top of it all, came the biggest shock, though one not unanticipated: college. Because I made too much money for the girls to get more than meager scholarships, but too little money to afford to pay for their educations in full, and because—another choice—we believed they had earned the right to attend good universities, universities of their choice, we found ourselves in a financial vortex.

 

​He asserts that the issue is stagnating salaries, but that SHOULD mean changes in the way we spend, shouldn't it?  You make $100K?  In the year 2000 you were able to eat out every week, go golfing, pay for private school for the kids, etc.....

 

Now in 2016 your salary is still $100K, but now your kids want to go to COLLEGE, which is far more than private school tuition, because you have told them they can go to the college of their choice and you will pay for it.  Eating out has gone up by 50% as well as several of your bills, like gas for the car, electricity for the house, etc.....

 

Please don't think I am picking on anyone here, this is directed at the author.

 

YES, the middle class is making less, but that does mean our spending habits need to change.  Believe me, ours have.  

 

 

This thing about having the "right" to attend universities of their choice, or the idea that these will somehow be better, is a really interesting one, and I think wrong-headed.

 

I say this as someone who thinks the whole prestige university thing is not a great model, and that university education is generally better off paid publicly (that is largely free for those who qualify.)

 

There is just something so elitist and unpleasant about this, as if someone going to a less expensive university, or God forbid a trade school, is somehow going to be less useful to society or have a less enjoyable life.  And this conviction that only "the best" institutions will produce a successful person, where the heck does that come from?  It seems that it is pretty evidently not true.

 

I think this is really about something more than keeping up with the Joneses.

 

 

[Matryoshka]

So far as aversion to debt, I think his views come in part from concerns about usury.  So to try and understand his advice would have to take into account why he, or anyone, might have concerns about usury.

 

Opposition to usury was very much a part of Christian theology for most of its history.  That's why the Jews ended up being the 'money-lenders' through the middle ages.  They were barred from many/most guilds, but since the Christians were prohibited from charging interest, that's one sphere they could work in.

 

Considering how taboo usury was for so much of Christian history, I find it more surprising how much of modern Christianity has seemingly done a 180 on the subject.

 

Here's an interesting excerpt on this topic from this article (The Morality of Money-Lending)

 

Yet the church violently opposed even such subsistence-level lending.

 

During this period, the Bible was considered the basic source of knowledge and thus the final word on all matters of importance. For every substantive question and problem, scholars consulted scripture for answers—and the Bible clearly opposed usury. In the Old Testament, God says to the Jews: “[He that] Hath given forth upon usury, and hath taken increase: shall he then live? he shall not live . . . he shall surely die; his blood shall be upon him.â€7 And:

 

In one breath, God forbade usury outright; in another, He forbade the Jews to engage in usury with other Jews but permitted them to make loans at interest to non-Jews.

 

Thou shalt not lend upon usury to thy brother; usury of money; usury of victuals; usury of anything that is lent upon usury.

Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury, that the Lord thy God may bless thee in all that thou settest thine hand to in the land whither thou goest to possess it.8

 

Although the New Testament does not condemn usury explicitly, it makes clear that one’s moral duty is to help those in need, and thus to give to others one’s own money or goods without the expectation of anything in return—neither interest nor principal. As Luke plainly states, “lend, hoping for nothing again.â€9 Jesus’ expulsion of the moneychangers from the temple is precisely a parable conveying the Christian notion that profit is evil, particularly profit generated by moneylending. Christian morality, the morality of divinely mandated altruism, expounds the virtue of self-sacrifice on behalf of the poor and the weak; it condemns self-interested actions, such as profiting—especially profiting from a seemingly exploitative and unproductive activity such as usury.

 

Thus, on scriptural and moral grounds, Christianity opposed usury from the beginning. And it constantly reinforced its opposition with legal restrictions. In 325 a.d., the Council of Nicaea banned the practice among clerics. Under Charlemagne (768–814 a.d.), the Church extended the prohibition to laymen, defining usury simply as a transaction where more is asked than is given.10 In 1139, the second Lateran Council in Rome denounced usury as a form of theft, and required restitution from those who practiced it. In the 12th and 13th centuries, strategies that concealed usury were also condemned. The Council of Vienne in 1311 declared that any person who dared claim that there was no sin in the practice of usury be punished as a heretic.

 

There was, however, a loophole among all these pronouncements: the Bible’s double standard on usury. As we saw earlier, read one way, the Bible permits Jews to lend to non-Jews. This reading had positive consequences. For lengthy periods during the Dark and Middle Ages, both Church and civil authorities allowed Jews to practice usury. Many princes, who required substantial loans in order to pay bills and wage wars, allowed Jewish usurers in their states. Thus, European Jews, who had been barred from most professions and from ownership of land, found moneylending to be a profitable, albeit hazardous, profession.

 

Although Jews were legally permitted to lend to Christians—and although Christians saw some practical need to borrow from them and chose to do so—Christians resented this relationship. Jews appeared to be making money on the backs of Christians while engaging in an activity biblically prohibited to Christians on punishment of eternal damnation. Christians, accordingly, held these Jewish usurers in contempt. (Important roots of anti-Semitism lie in this biblically structured relationship.)

Edited April 25, 2016 by Matryoshka

[Bluegoat]

Opposition to usury was very much a part of Christian theology for most of its history.  That's why the Jews ended up being the 'money-lenders' through the middle ages.  They were barred from many/most guilds, but since the Christians were prohibited from charging interest, that's one sphere they could work in.

 

Considering how taboo usury was for so much of Christian history, I find it more surprising how much of modern Christianity has seemingly done a 180 on the subject.

 

Here's an interesting excerpt on this topic from this article (The Morality of Money-Lending)

 

Yet the church violently opposed even such subsistence-level lending.

 

During this period, the Bible was considered the basic source of knowledge and thus the final word on all matters of importance. For every substantive question and problem, scholars consulted scripture for answers—and the Bible clearly opposed usury. In the Old Testament, God says to the Jews: “[He that] Hath given forth upon usury, and hath taken increase: shall he then live? he shall not live . . . he shall surely die; his blood shall be upon him.â€7 And:

 

In one breath, God forbade usury outright; in another, He forbade the Jews to engage in usury with other Jews but permitted them to make loans at interest to non-Jews.

 

Thou shalt not lend upon usury to thy brother; usury of money; usury of victuals; usury of anything that is lent upon usury.

Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury, that the Lord thy God may bless thee in all that thou settest thine hand to in the land whither thou goest to possess it.8

 

Although the New Testament does not condemn usury explicitly, it makes clear that one’s moral duty is to help those in need, and thus to give to others one’s own money or goods without the expectation of anything in return—neither interest nor principal. As Luke plainly states, “lend, hoping for nothing again.â€9 Jesus’ expulsion of the moneychangers from the temple is precisely a parable conveying the Christian notion that profit is evil, particularly profit generated by moneylending. Christian morality, the morality of divinely mandated altruism, expounds the virtue of self-sacrifice on behalf of the poor and the weak; it condemns self-interested actions, such as profiting—especially profiting from a seemingly exploitative and unproductive activity such as usury.

 

Thus, on scriptural and moral grounds, Christianity opposed usury from the beginning. And it constantly reinforced its opposition with legal restrictions. In 325 a.d., the Council of Nicaea banned the practice among clerics. Under Charlemagne (768–814 a.d.), the Church extended the prohibition to laymen, defining usury simply as a transaction where more is asked than is given.10 In 1139, the second Lateran Council in Rome denounced usury as a form of theft, and required restitution from those who practiced it. In the 12th and 13th centuries, strategies that concealed usury were also condemned. The Council of Vienne in 1311 declared that any person who dared claim that there was no sin in the practice of usury be punished as a heretic.

 

There was, however, a loophole among all these pronouncements: the Bible’s double standard on usury. As we saw earlier, read one way, the Bible permits Jews to lend to non-Jews. This reading had positive consequences. For lengthy periods during the Dark and Middle Ages, both Church and civil authorities allowed Jews to practice usury. Many princes, who required substantial loans in order to pay bills and wage wars, allowed Jewish usurers in their states. Thus, European Jews, who had been barred from most professions and from ownership of land, found moneylending to be a profitable, albeit hazardous, profession.

 

Although Jews were legally permitted to lend to Christians—and although Christians saw some practical need to borrow from them and chose to do so—Christians resented this relationship. Jews appeared to be making money on the backs of Christians while engaging in an activity biblically prohibited to Christians on punishment of eternal damnation. Christians, accordingly, held these Jewish usurers in contempt. (Important roots of anti-Semitism lie in this biblically structured relationship.)

 

Yes, it is interesting how it has been put on the back-burner by many, though if you go looking you can find quite a lot, especially in some sections of the Christian world.  But part of the reason in the US may be that people like DR seem to be so committed, philosophically, to a capitalist model - they don't like usury because its been seen as wrong but they still have a very modern and limited view of what it means.

 

So the idea that it might include, for example, saving money by paying less than the value of an item by taking advantage of the desperation of the seller doesn't really come into it - even though in many ways that kind of financial not giving consideration to real worth is at the heart of the idea of usury.

 

So it seems illogical in many cases the way he puts it, as if it is only bad because it will cause you money problems - clearly people can actually do really well from it, or circumstances can mean it is a good bet anyway. 

[Carol in Cal.]

I think that that is one of the reasons that Habitat for Humanity, a Christian nonprofit, does not charge interest.

[FaithManor]

In our area much of what Dave Ramsey says or advocates has been taken to an extreme. Thus we see a lot of people who go out of their way to absolutely take advantage of others to save a penny, and at a shocking, shocking level. I think the mindset that doing this is not usury or immoral therefore acceptable behavior contributes a great deal to the reason that the economy is not rebuilding here, and low income families cannot get ahead. The mindset is always "Why pay a fair wage if I don't have to?" "Why pay a reasonable price for this used car if I can possibly haggle it down to nothing because these people are desperate?"  "Why pay the fair value for a house or even only 20-30% below the value of house when it was repossessed so I will only pay pennies on the dollar?" "Why_______?" It has gone beyond getting a bargain, and right into "whom can I shaft to best benefit me?".

 

So while it helps the individual get ahead, the long term aspects of such thinking have terrible ramifications for the community.