Living paycheck to paycheck (article)

[Carrie12345]

Necessities hit people (fiscal percentage and emotionally) differently than luxuries.

I don’t bat an eye paying $500 at the vet, because I consider my pets luxuries. (Don’t come at me. I’m okay with others having a different view.) But a $200 bill for two small cavities for my human child when I have dental insurance makes me cringe.

I actually shed tears when the gas pump screwed me and gave me Supreme at Supreme price. That extra $20ish gutted me. But I’ll pay $40 for crappy pizza when I don’t want to cook.

The cost of necessities hits hard. Obviously it’s going to hit harder for those who don’t have wiggle room AND/OR can’t risk their next paycheck for non-guaranteed returns.

[SKL]

4 minutes ago, Carrie12345 said:

My gross wealth is kinda eh with zero credit card or car debt. “Eh” being more than many, much more than globally. But we’re comfortable enough to continue growing it averagely.

Isn’t the statistic that a high proportion of debt is medical, compared to, say, video game systems and shoes?

The percentage is not that high, and it includes things like orthodontics that are paid over time.  I also assume it includes bills issued to uninsured people which everybody knows will receive hardship forgiveness.  (My sister had that situation and, even though she told them before the procedure that she had no way to pay, and they said "don't worry about it," it took years for the actual forgiveness to occur.) So, that figure is not what it appears to be.

There should be a law against billing uninsured people more than a small % higher than insured people.  Everyone knows those inflated amounts are never going to be paid, nor should they be.

[Bootsie]

6 minutes ago, Carrie12345 said:

My gross wealth is kinda eh with zero credit card or car debt. “Eh” being more than many, much more than globally. But we’re comfortable enough to continue growing it averagely.

Isn’t the statistic that a high proportion of debt is medical, compared to, say, video game systems and shoes?

I have never seen a statistic that points to a high poportion of debt being medical.  Credit card debt is a much larger percentage of average family debt than "other" debt.   People could have charged medical bills to their credit card; it is difficult to know what was purchased on credit with a credit card.  

[SKL]

2 minutes ago, Carrie12345 said:

Necessities hit people (fiscal percentage and emotionally) differently than luxuries.

I don’t bat an eye paying $500 at the vet, because I consider my pets luxuries. (Don’t come at me. I’m okay with others having a different view.) But a $200 bill for two small cavities for my human child when I have dental insurance makes me cringe.

Did you check to see if your health insurance covers part of your kid's cavity filling?

[SKL]

6 minutes ago, Bootsie said:

I have never seen a statistic that points to a high poportion of debt being medical.  Credit card debt is a much larger percentage of average family debt than "other" debt.   People could have charged medical bills to their credit card; it is difficult to know what was purchased on credit with a credit card.  

Right, even though I pay off my cards every month, I do put all of my health bills on my credit card.  And depending on what my kids have been up to (Kid2's sports-related concussion cost $4K, same month Kid1 had a $4K root canal [roughly half paid by insurance]), it can be a lot.  But I don't consider it debt.  It's more like cash in transit.  😛

Edited January 12 by SKL

[Bootsie]

8 minutes ago, Carrie12345 said:

Necessities hit people (fiscal percentage and emotionally) differently than luxuries.

I don’t bat an eye paying $500 at the vet, because I consider my pets luxuries. (Don’t come at me. I’m okay with others having a different view.) But a $200 bill for two small cavities for my human child when I have dental insurance makes me cringe.

I actually shed tears when the gas pump screwed me and gave me Supreme at Supreme price. That extra $20ish gutted me. But I’ll pay $40 for crappy pizza when I don’t want to cook.

The cost of necessities hits hard. Obviously it’s going to hit harder for those who don’t have wiggle room AND/OR can’t risk their next paycheck for non-guaranteed returns.

Yes, this is one of the most important lessons I wanted my children to learn when they learned about financial management.  A $20 allowancce soulds fun, but it isn't fun when you have to spend $10 on club dues and $5 on underwear and only have $5 of discretionary spending money on that "luxury" item.  

[historically accurate]

I like numbers so I ran all the medians for my LCOL area and then used some "recommended budgeting" to see if it would work: 

 

Median household income: just shy of $45,000, which translates to slightly less than $3000 takehome monthly

 

I think most people have heard of Dave Ramsey, so I used his recommended percentages/average spending for a median household budget for my area:

Giving 10% - $300 (although possibly people who follow DR do 10% of gross)

Savings 15% - $450 - (percentage amount)

Food (he doesn't give percentages, he gives amounts, but here are the percentages): Single 12% or about $350, Couple 23% or about $685, family of 4: 32% or about $970

Utilities 7% - $225 (averages)

Housing 25% - $750 - percentage amount

Transportation 10% - $300 (averages)

Medical 4.5% (average here) - $130

Personal Spending 7% - $200 (averages)

Misc 5% - $150 - percentage

Insurance (amounts not given), but we are down to 4.5% ($130) remaining income for a single person, (6.5%) ($0) for a couple, and (15.5%) ($0) for a family of four.

Note we have not scheduled any debt payments, no daycare payments, or an ounce of paid-for fun (unless you took it out of misc), and the food amounts are on the "Thrifty food plan" for a family of 4, although "Moderate food plan" for a single or a couple. 

 

Amounts taken from an article posted 9 days ago: https://www.ramseysolutions.com/budgeting/budget-percentages

 

 

Now for the really bad part:

 

2 bedroom apartment: $1250 (note this would not pass the test for actually getting it as most of the rental places here require 3x your income to get a foot in the door). You can find a 1 bedroom for $800, my Brother lives in one, but I haven't seen $750 for a rental in a LONG time. My mobile home park lot rent is more than that, and you have to pay for the house beyond that.

Median house price: just over $278,000. That is definitely not happening on $45,000 gross household income. 

$130 for medical would not cover weekly therapy for one person. We have fairly good insurance (for the USA, anyway), but it wouldn't cover an ER visit either. It would cover one Urgent care visit with a couple bucks left for the prescription if needed though. 

$300 would cover gas here at $3.79 a gallon with two commuters, but there wouldn't be much left over for maintenance and saving for a replacement. 

 

 

 

Edited January 12 by historically accurate

[Carrie12345]

15 minutes ago, SKL said:

Did you check to see if your health insurance covers part of your kid's cavity filling?

It helps, but the amount of reimbursement is *almost* not worth the man hours to make it happen. Almost.

[Heartstrings]

5 minutes ago, historically accurate said:

Median house price: just over $278,000. That is definitely not happening on $45,000 gross household income. 

If they just skip Starbucks and only eat beans and rice.  Use candles instead of electricity and it doubles as a heat source even!  They just need to be more disciplined.  So spoiled, thinking they need hot water. 
 

(that was sarcasm). 

[Faith-manor]

The concept of cutting back is not an option. Already people are rationing healthcare, kids with life threatening allergies without epi pens because they are so unaffordable, the state of Michigan has the highest car insurance rates in the nation by a WIDE margin and drivers are mandated to carry insurance, people are literally duct taping their cars together, and the $680 one bedroom apartment is a roach infested, drafty, freezing cold, tenement style slum lord crap heap. These same folks are already eating ramen noodles, and they are NOT making bad decisions. This is devolving into The Hunger Games for District 13 and the odds are not in their favor!

The hate on young people gets old. I have not yet even met a twenty something who was being irresponsible with their money. They are working their a$$es off, being taken advantage of by employers, being fleeced by the insurance and housing industry, and then told by their better off elders that they are morons for not being able to do better despite Panem screwing them over and over and over. 

It should also be noted that many GenZ not only believe, and not incorrectly, that home ownership is out of reach, but that they will never be able to retire no matter how old or infirm. They aren't wrong. All of their social security contributions are going to go to their parents and grandparents, and since congress has kicked that can down the road for 50 years, it isn't going to be fixed. So a lot of them are prioritizing travel now, experiences now, because they will never have a time of not working like a dog before they drop dead. At some point, life should at least be worth living. 

According to Justice Gap.isc.gov, (I cannot get my kindle to copy and paste the link), 15% live in poverty, 1 in 5 children. The income level required to constitute low income would be mean homelessness in my county.

By every metric, the middle class has been shrinking steadily for the last 50 years. Gen Z is well aware of their predicament so their decision making is going to look very different, with good reason, than that of the Boomers and Xers who talk about them negatively all the time. Maybe they do indulge now and again. Why not? They can't get ahead, their future is very bleak by every measure, the planet is being wrecked. They may as well have a little fun now because hell is their future. Deprivation now will not translate to comfort later.

I am going to call a spade a spade here. It is immoral, literally disgusting that Boomers and Gen X talk like this about Millennial and GenZ. 7.5% of their gross income is stolen from them to support the generations that malign them constantly. Literally, two generations are committing mass theft from, and then calling them character deficient. The current talk is to make THEM work to 70, many calls for this, even 72. Meanwhile the thieves get to retire at 65 even 62. Look in the mirror before you call out the younger generations.

[Condessa]

15 hours ago, Heartstrings said:

I saw a thing the other day talking about how comfortable you are really depend on housing and childcare.  

Basically if you have a low interest rate mortgage with no kids, your monthly expenses are much, much less than someone with a 6%-8% interest rate and 2 kids in daycare. Childcare being $2500 a month plus is not at all uncommon.  
 

It’s not really fair for the first group to look down their nose at the second group.  Daycare costs aren’t fixable by skipping a monthly Starbucks.  
 

While I do agree no one should be looking down their noses at others, to some degree, those differences are based on choices.  Not always.  But the reason one family has a low-interest mortgage while another has ever-increasing rent might be because the first chose to forgo vacations, eating out, and renting a nicer, more spacious home while saving to get into a house (the situation of two branches of my family).  The reason one family might have daycare costs for one and another has them for three is a choice.  The reason another family has six kids and no childcare costs is because they chose when young to plan ahead and lived frugally with one spouse working to put the other through a higher degree before beginning to have children so that they could have a career that could support a family on one income.  While many things outside our control do happen that affect our financial situations, many others are within our control.

[Heartstrings]

26 minutes ago, Condessa said:

But the reason one family has a low-interest mortgage while another has ever-increasing rent might be because the first chose to forgo vacations, eating out, and renting a nicer, more spacious home while saving to get into a house (the situation of two branches of my family). 

Or…it could be that by a quirk of timing interest rates were 2% in 2020 and 8% in 2023 regardless of credit or down payment saved.  Even perfect credit and 50% down could not get you a 2% or 3% interest rate in 2023. Maybe people were still in college in 2020, or had to move for a job.  There are lots of reasons why someone didn’t buy in 2020 before interest rates jumped.  

Rent increased more than 20% from 2020-2023 because landlords raised the rent, completely separate from any individuals choices. You could be sitting in your apartment with perfect credit waiting for the right time to buy and get hit with a rent increase. It’s not something that only happens to irresponsible people.  

Having a child or two during that time period then having housing and child care increase on you through no fault of your own is sort of undoable.   You can’t put them back.  
 

I’m sure not how young people starting out *today* are suppose to plan ahead.  I guess they should have considered 6% interest rates in middle school? 

Many of them are planning for their future now, with sky high costs for essentials, they are planning on being poor forever and planning to forgo children because they can barely support themselves.  That’s personally responsible but not a great future for the country. There is a pretty unanimous agreement that population decline is a bad thing.   
 

Edited January 12 by Heartstrings

[HomeAgain]

24 minutes ago, Condessa said:

While I do agree no one should be looking down their noses at others, to some degree, those differences are based on choices.  Not always.  But the reason one family has a low-interest mortgage while another has ever-increasing rent might be because the first chose to forgo vacations, eating out, and renting a nicer, more spacious home while saving to get into a house (the situation of two branches of my family).  The reason one family might have daycare costs for one and another has them for three is a choice.  The reason another family has six kids and no childcare costs is because they chose when young to plan ahead and lived frugally with one spouse working to put the other through a higher degree before beginning to have children so that they could have a career that could support a family on one income.  While many things outside our control do happen that affect our financial situations, many others are within our control.

This is utter and complete nonsense.

My oldest child is 24.  He lives at home because a one bedroom apartment here is out of reach for him.  He has an emergency fund in the bank equal to an entire year's salary, and can't purchase a house because the cost is so high and the interest rates are insane.  He drives a car he paid for in cash and is modest.

He will not have kids, probably ever if not for a long while.  There isn't enough childcare available and what is available is crazy for costs. 

 

My child is not an anomaly!  This is a common situation in his friend group.  No matter where in the country they live, they're living with their parents or 3 roommates.  They have good jobs, but everything is out of reach.  None of them are having kids any time soon.  I honestly cannot believe that the whole "You're just making bad decisions" is something a person would say after looking at the bigger picture.  They're making the only decisions they can!

[Heartstrings]

9 minutes ago, HomeAgain said:

This is utter and complete nonsense.

My oldest child is 24.  He lives at home because a one bedroom apartment here is out of reach for him.  He has an emergency fund in the bank equal to an entire year's salary, and can't purchase a house because the cost is so high and the interest rates are insane.  He drives a car he paid for in cash and is modest.

He will not have kids, probably ever if not for a long while.  There isn't enough childcare available and what is available is crazy for costs. 

 

My child is not an anomaly!  This is a common situation in his friend group.  No matter where in the country they live, they're living with their parents or 3 roommates.  They have good jobs, but everything is out of reach.  None of them are having kids any time soon.  I honestly cannot believe that the whole "You're just making bad decisions" is something a person would say after looking at the bigger picture.  They're making the only decisions they can!

I honestly think a lot of people don’t want to see the big picture. They decided Starbucks and laziness was the problem a long time ago and that makes them feel good so they won’t change their mind. 
 

My kiddo is in the same boat.  He’s in college, paying his own way.  Work is scarce, full time work almost impossible.  He’s been hustling at least once a week to find a better job, going to 20+ places a day on top of online applications. Nowhere is hiring, despite Now Hiring signs.  His current job cut everyone’s hours to 10 hours a week!  

I can hear “he should hustle every day!  See, lazy!” but gas ain’t free.  

Edited January 12 by Heartstrings

[Condessa]

11 minutes ago, Heartstrings said:

Or…it could be that by a quirk of timing interest rates were 2% in 2020 and 8% in 2023 regardless of credit or down payment saved.  Even perfect credit and 50% down could not get you a 2% or 3% interest rate in 2023. Maybe people were still in college in 2020, or had to move for a job.  There are lots of reasons why someone didn’t buy in 2020 before interest rates jumped.  

Rent increased more than 20% from 2020-2023 because landlords raised the rent, completely separate from any individuals choices. You could be sitting in your apartment with perfect credit waiting for the right time to buy and get hit with a rent increase. It’s not something that only happens to irresponsible people.  
 

No, I mean that this exact situation happened in my extended family.  Two families, same numbers of kids at the same ages, living in the same area, both single income, had similar incomes, family A dad had two years on family B dad career establishment, family B literally chose to live more frugally to get into a house and family A chose to eat out all the time, rent a much larger home, go on vacations.  Which is truly fine.  There is nothing wrong with having different priorities in life.  They see it as enjoying their time now while their kids are still young and building memories, so taking their crew for interesting outings+eating out every weekend and going on a couple of family vacations per year is their priority right now, not making choices to try to ease their financial situation long term. 

I don't see a problem with that, but when they bemoan the impossible, unavoidable rising costs of living and how it's just not possible for a family to get ahead, get into their own home--I sympathize that rising costs stink and I'm not going to say anything else unless my opinion is directly asked for, but I'm not going to agree that it's just the inevitable forces of economics causing disparities here.  

[Pawz4me]

36 minutes ago, Heartstrings said:

I’m sure not how young people starting out *today* are suppose to plan ahead.  I guess they should have considered 6% interest rates in middle school? 
 

I kinda don't really want to get  into this, because there are many equally (IMO) valid points of view being made in this thread, and I certainly don't disagree that young people have it rough right now.

But as far as interest rates -- well, yes. Parents should have been warning their kids that the low interest rates of the past few years were kind of an anomaly, and that they shouldn't assume that would always be the case. See chart of home mortgage rates 1973-2023 (Bankrate).

I'm older than many on here. My first mortgage had an interest rate of (IIRC) close to 8 percent, and at the time I thought that was pretty good. I knew people who'd taken out mortgages in the 13-14 percent range a couple of years prior. So to me a 6 percent mortgage isn't a huge deal. Certainly anyone would prefer a lower rate, but that's always true.

Edited January 12 by Pawz4me

[Condessa]

18 minutes ago, HomeAgain said:

This is utter and complete nonsense.

. . .

I honestly cannot believe that the whole "You're just making bad decisions" is something a person would say after looking at the bigger picture.  They're making the only decisions they can!

It's complete and utter nonsense that, to some degree, differences in financial situations are based on choices?  People's choices in life have zero affect on their long term finances? 

No one made a personal attack on your child.  No one said "They're just making bad decisions".  You're setting up a strawman here. 

[HomeAgain]

6 minutes ago, Condessa said:

It's complete and utter nonsense that, to some degree, differences in financial situations are based on choices?  People's choices in life have zero affect on their long term finances? 

No one made a personal attack on your child.  No one said "They're just making bad decisions".  You're setting up a strawman here. 

You don't get it.

I will use small words: they don't have the same choices you had.

The choices available to young adults are miserable and make a lot of things out of reach.  You cannot keep pretending that they can just do better and get out of bad situations.  It doesn't do anything for your argument except make it seem that you have no idea what is going on.

[Scarlett]

3 hours ago, Heartstrings said:

I can almost guarantee you that if that building still exists someone lives there though, probably paying a ton more and it may not have been updated much since you were there.  I think we have a bit of a distorted view about “kids these days” and people not being  willing to sacrifice the same way we did. Maybe it’s because once we move up the income ladder we tend not to maintain connections with those still in that beginning stage, maybe it’s just rose colored glasses about our own past. I see plenty of people using the laundry mat every day, for example, so some one is still living that lifestyle.  

I drove by it a few weeks ago and it looks nice still. I could not find the current rent though. Similar nearby are going for $700.  The inflation calculator puts it at $465, so yes it is relatively higher now. 

[Carrie12345]

40 minutes ago, Heartstrings said:

Or…it could be that by a quirk of timing interest rates were 2% in 2020 and 8% in 2023 regardless of credit or down payment saved.  Even perfect credit and 50% down could not get you a 2% or 3% interest rate in 2023. Maybe people were still in college in 2020, or had to move for a job.  There are lots of reasons why someone didn’t buy in 2020 before interest rates jumped.  

Oh, that quirk of timing is definitely real!!! We managed to buy a starter home at 6.625% at 28 after years of struggling to scrape up the money. And then the housing market went **poof** and we were stuck there with negative equity for ages.

2.9% simply landed in our laps in our 40s and equity magically dumped into the old house. It wasn’t anything special that we did!

I am NOT the one to tell my kids that homeownership is a simple budgeting issue. 

[Condessa]

Just now, HomeAgain said:

You don't get it.

I will use small words: they don't have the same choices you had.

The choices available to young adults are miserable and make a lot of things out of reach.  You cannot keep pretending that they can just do better and get out of bad situations.  It doesn't do anything for your argument except make it seem that you have no idea what is going on.

I'm not sure why you think everyone here is talking about young adults.  The original article wasn't about people just starting out in life, but people in general.  I am not talking about things that happened a long time ago, I am talking about within the last four years.

[Heartstrings]

3 minutes ago, Pawz4me said:

I'm older than many on here. My first mortgage had an interest rate of (IIRC) close to 8 percent, and at the time I thought that was pretty good. I knew people who'd taken out mortgages in the 13-14 percent range a couple of years prior. So to me a 6 percent mortgage isn't a huge deal. Certainly anyone would prefer a lower rate, but that's always true.

I also had an 8% interest rate and it was fine.  Home prices have increased substantially in that time too.   Being hit with a higher interest rate plus high prices, while wages have been mostly stagnant is a trifecta of bad. 

Why did house prices go up so much so fast?  Investors are snapping up starter homes and renting them out for ridiculous amounts.  With most of the little starter homes owned by investors new buyers have to wait until they can afford mid level homes. Which is made harder by paying that ridiculous rent in the first place.

 Who benefited from investors buying at higher prices?  We did!  I did.  My cute little $100k starter house is now a rental going for 3 times what my mortgage was.  

They have no choice but to deal with it, but just blaming it all on bad choices is ridiculous.  And we can poo poo it all we want, but some of us will be impacted by the fall out to the economy when we have to deal with the consequences of a lost generation.  

[Heartstrings]

30 minutes ago, Pawz4me said:

But as far as interest rates -- well, yes. Parents should have been warning their kids that the low interest rates of the past few years were kind of an anomaly, and that they shouldn't assume that would always be the case. See chart of home mortgage rates 1973-2023 (Bankrate).

Having been forewarned doesn’t do much to make the math work out at the end of a month.  If rent is too much for the wages, or interest rates matched with higher housing costs puts ownership out of reach there’s nothing they can do, even if they knew it was coming.   Knowing about it in advance doesn’t add more dollars to paychecks.  

Edited January 12 by Heartstrings

[Condessa]

8 minutes ago, Heartstrings said:

They have no choice but to deal with it, but just blaming it all on bad choices is ridiculous.  

I don't think anyone is just blaming it all on bad decisions.  There are tons of things that can negatively impact our finances that we have no control over.  When they strike, it is rotten, and when many strike at once, it can be crippling for years.  But I think it's important to balance that knowledge with the knowledge that our choices and actions over time can also have a great effect.  We are not powerless.  It is not a hopeless struggle to try. 

[Faith-manor]

19 minutes ago, Heartstrings said:

I honestly think a lot of people don’t want to see the big picture. They decided Starbucks and laziness was the problem a long time ago and that makes them feel good so they won’t change their mind. 
 

My kiddo is in the same boat.  He’s in college, paying his own way.  Work is scarce, full time work almost impossible.  He’s been hustling at least once a week to find a better job, going to 20+ places a day on top of online applications. Nowhere is hiring, despite Now Hiring signs.  His current job cut everyone’s hours to 10 hours a week!  

I can hear “he should hustle every day!  See, lazy!” but gas ain’t free.  

This. 

I would like to point out that global warming/climate change has been settled science for decades. The same people viciously tearing into the younger generations are the ones that KNEW what was going to happen and actively advocated against change so they could maintain an economic engine that benefited them. As far as I am concerned, they deserve whatever fun and relaxation they can find because the damn world is burning through no fault of their own, but they will pay the ultimate consequences for their elders' follies. Who are the irresponsible, narcissitic punks in this scenario? Clue: It isn't your kids or your grandkids.

[SKL]

1 hour ago, Faith-manor said:

I am going to call a spade a spade here. It is immoral, literally disgusting that Boomers and Gen X talk like this about Millennial and GenZ. 7.5% of their gross income is stolen from them to support the generations that malign them constantly. Literally, two generations are committing mass theft from, and then calling them character deficient. The current talk is to make THEM work to 70, many calls for this, even 72. Meanwhile the thieves get to retire at 65 even 62. Look in the mirror before you call out the younger generations.

Wow, what about all the money we paid into SS / Medicare (not to mention other taxes)?

Our generation has to work until age 67.  Though, for decades, I've been told by the government that SS is scheduled to go bankrupt right around the time I turn 67.

When I was in my 20s with mega student loan debt (and no tax breaks for it), my marginal tax rate was 45%.

I DO know young adults who act like fools (with money and otherwise).  I'm glad you don't.  Lucky you.  I guess that means they don't hit you or your parents up for cash.  Cash that you could otherwise put away for the years of living off bankrupt social security that you're allegedly stealing from younger people.

Edited January 12 by SKL

[Pawz4me]

12 minutes ago, Heartstrings said:

Having been forewarned doesn’t do much to make the math work out at the end of a month.  If rent is too much for the wages, or interest rates matched with higher housing costs puts ownership out of reach there’s nothing they can do, even if they knew it was coming.   Knowing about it in advance doesn’t add more dollars to paychecks.  

Sure. But you're moving the goalposts quite a way from your original statement, which was the one my response was addressing.

[SKL]

On 1/12/2024 at 1:43 PM, HomeAgain said:

I will use small words: they don't have the same choices you had.

The choices available to young adults are miserable and make a lot of things out of reach.  You cannot keep pretending that they can just do better and get out of bad situations.  It doesn't do anything for your argument except make it seem that you have no idea what is going on.

Hate to tell you, but coming of age in the 1980s wasn't exactly a piece of cake. 

Either a lot of boardies came from privileged backgrounds, or they don't have long-term memory of difficult financial times.

People talking like life was always easy until 2024.  It blows my mind.

Edited January 13 by SKL

[Scarlett]

I don’t think it is hating on young people to point out that some blow a lot of money. Our youngest lived at home until he was 22. When I had a say over his spending he saved 15k. Now he has no savings. I see what he spends money on.  I can see the wheels turning now though….he is looking at houses and realizing he needs a big down payment. 
 

Things are worse in many ways but as always some people make better life choices than others. 

[Heartstrings]

3 minutes ago, Pawz4me said:

Sure. But you're moving the goalposts quite a way from your original statement, which was the one my response was addressing.

My original statement was “ I guess they should have considered 6% interest rates in middle school”. to which you replied that their parents should have told them about higher interest rates.  Which, sure, I’ll give you that.  Of course wether or not a child was forewarned by parents is outside of the child’s control, but it’s also rather irrelevant.  Parents could have down weekly power point presentations about interest rates and home prices increasing, and that would still not help a young person with making rent *today*.  
 

 

[Scarlett]

1 minute ago, SKL said:

Hate to tell you, but coming in age in the 1980s wasn't exactly a piece of cake. 

Either a lot of boardies came from privileged backgrounds, or they don't have long-term memory of difficult financial times.

People talking like life was always easy until 2024.  It blows my mind.

I know right. We struggled a lot and had very little help from family. Sometimes we had one car, sometimes my mom gave us some canned food to eat. We did not have nice furniture or eat out or buy nice clothes. 

[Faith-manor]

15 minutes ago, Scarlett said:

I don’t think it is hating on young people to point out that some blow a lot of money. Our youngest lived at home until he was 22. When I had a say over his spending he saved 15k. Now he has no savings. I see what he spends money on.  I can see the wheels turning now though….he is looking at houses and realizing he needs a big down payment. 
 

Things are worse in many ways but as always some people make better life choices than others. 

That is your son. Characterizing am entire generation by what one relative did isn't exactly accurate. We have data that shows the real picture. The real picture is not pretty for young people.

 

[Scarlett]

6 minutes ago, Faith-manor said:

That is your son. Characterizing am entire generation by what one relative did isn't exactly accurate. We have data that shows the real picture. The real picture is not pretty for young people.

 

I did not say an entire generation. Good Grief.

edited to add also ‘data’ rarely shows the whole picture.   I try to take one situation at a time…. I do my best to guide the young people I can. 

Edited January 12 by Scarlett

[Pawz4me]

25 minutes ago, SKL said:

Wow, what about all the money we paid into SS / Medicare (not to mention other taxes)?

 

Here are the rules, or what seems to me to be the rules --

Attacking Boomers is okay. Making all the hyperbolic, gross generalizations you want is fair game. They're a monolith that's always operated as one organism. Every one of them made similar (bad) choices. And apparently now that applies to Gen X, too (welcome to the club, y'all).

But Boomers and Gen X'ers must under no circumstances ever say anything at all disparaging or derogatory about younger people, even when our comments are not hyperbolic, sweeping generalizations but rather pointing out things about specific young people (sometimes even our own kids). It's just not allowed. It's hateful and attacking and we just can't do that.

It's of course called a double standard, and it makes productive conversation impossible, but . . here we are.

[QueenCat]

1 hour ago, Pawz4me said:

But as far as interest rates -- well, yes. Parents should have been warning their kids that the low interest rates of the past few years were kind of an anomaly, and that they shouldn't assume that would always be the case. See chart of home mortgage rates 1973-2023 (Bankrate).

I'm older than many on here. My first mortgage had an interest rate of (IIRC) close to 8 percent, and at the time I thought that was pretty good. I knew people who'd taken out mortgages in the 13-14 percent range a couple of years prior. So to me a 6 percent mortgage isn't a huge deal. Certainly anyone would prefer a lower rate, but that's always true.

exactly! My first mortgage was 10.5%. Second one was around 8%. The super low rates could not feasibly last. I'm personally enjoying higher earnings on my investments right now. No one wants to mention that part.

[SKL]

Yeah ftr my parents' mortgage rate was 11.75% when they moved into their current house in 1979.

Mortgage rates when I bought my house averaged 8%, which was terrific compared to 11.75.

My student loan interest maxed out at 12%.  Hate to think how high they would have gone had that not been the contractual max.

[SKL]

8 minutes ago, QueenCat said:

I'm personally enjoying higher earnings on my investments right now. No one wants to mention that part.

When I paid off my debt and started building savings, I was afraid to mention the above.  Because most of my loved ones were still in debt.  How dare I be positive on interest rate increases.  But, I get your point.  For those who've socked away money, low interest rates can actually be problematic, especially if they were budgeting to live off the investment earnings.

[Heartstrings]

I’m not sure a discussion about how well investments are doing is the best add on to a discussion about how and why young and low income people are struggling in this current economic environment.   Might just be me though.  

[SKL]

Just now, Heartstrings said:

I’m not sure a discussion about how well investments are doing is the best add on to a discussion about how and why young and low income people are struggling in this current economic environment.   Might just be me though.  

Low income people include retired people living off pensions, which are income-producing investments.

[historically accurate]

12 minutes ago, Scarlett said:

I know right. We struggled a lot and had very little help from family. Sometimes we had one car, sometimes my mom gave us some canned food to eat. We did not have nice furniture or eat out or buy nice clothes. 

I honestly don't see how it gets better with the budget I posted above.

A couple may make the median income here, but the math doesn't work, even using Dave Ramsey who is super conservative. Forget about saving up to live the better life eventually; there's just nothing there to save over the 15% toward retirement budgeted. In fact, a couple would be hard-pressed to not go in the hole every month, and a medical emergency or broken car would be near impossible to recover from.

The median income (for my area) and Ramsey's "perfect" budget I posted above leaves a couple literally in the hole before paying for any insurance, one phone (let alone 2) or home internet. There is a crappy apartment building , apologies to my brother who lives in it, that charges $800 for a 450 sq foot 1 bedroom apartment, which is still $50 over the recommended percentage for housing. If you got a median 2 bedroom with a roommate, you are looking at $625 in rent, which still leaves you in the hole. You could nix the giving area ($300), which might cover insurance for a young couple (but maybe not, auto insurance is super expensive for that age group). This is before you have any fun; that is just working, eating and sleeping.

Without college educations, it is unlikely they will make more than the median. Nowadays, it is very difficult to come out of college with $0 of college debt; not impossible, but unlikely. 

 

[Arcadia]

33 minutes ago, Pawz4me said:

And apparently now that applies to Gen X, too (welcome to the club, y'all).

As a Gen X, can I blame the silent generation for outliving their retirement savings by being still alive in their 90s, and thus making us the sandwich generation 🤦‍♀️
 

As someone who grew up in a consistently ranked most expensive city in the world, my husband and I’s expectations of cost is warp towards the higher estimate. SF Bay Area grocery prices are in general cheaper than where I am from. Cars and housing are also cheaper. Income tax though is much higher than my country of origin. My kids grew up here and all they know are South Bay’s cost of living. So they are prepared to work near home and stay at home when they start working so that they can save rent money for future needs. They save all their fun money because their budgeting is based on HCOL which makes them want to build up bigger emergency day funds. 
 

I do see a different lifestyle creep among my husband’s younger colleagues. The “need” to own high end designer handbags e.g. LV, Prada, Dior for work in tech. That was rare pre-pandemic. I have no idea why.

Edited January 12 by Arcadia

[Heartstrings]

4 minutes ago, historically accurate said:

I honestly don't see how it gets better with the budget I posted above.

A couple may make the median income here, but the math doesn't work, even using Dave Ramsey who is super conservative. Forget about saving up to live the better life eventually; there's just nothing there to save over the 15% toward retirement budgeted. In fact, a couple would be hard-pressed to not go in the hole every month, and a medical emergency or broken car would be near impossible to recover from.

The median income (for my area) and Ramsey's "perfect" budget I posted above leaves a couple literally in the hole before paying for any insurance, one phone (let alone 2) or home internet. There is a crappy apartment building , apologies to my brother who lives in it, that charges $800 for a 450 sq foot 1 bedroom apartment, which is still $50 over the recommended percentage for housing. If you got a median 2 bedroom with a roommate, you are looking at $625 in rent, which still leaves you in the hole. You could nix the giving area ($300), which might cover insurance for a young couple (but maybe not, auto insurance is super expensive for that age group). This is before you have any fun; that is just working, eating and sleeping.

Without college educations, it is unlikely they will make more than the median. Nowadays, it is very difficult to come out of college with $0 of college debt; not impossible, but unlikely. 

 

I appreciate you sticking to numbers.  I feel like your outlined budget is really hard to argue with. The idea that $45k isn’t enough is hard to fathom even though you lay it out clearly.  

[Brittany1116]

Millennial whose first house was purchased in last recession at 6.25%. Refinanced down to 3. I would tell my children not to buy at 6 or 8%, even though we were at the time DINKs and it didn't really pain us to pay it. They go up, they come down, repeat. Our money could have been better spent elsewhere, but I say that witu hindsight.  

[Pawz4me]

30 minutes ago, QueenCat said:

 I'm personally enjoying higher earnings on my investments right now. No one wants to mention that part.

And no doubt someone will come  along and blame you for it, or imply that it's some sort of organized conspiracy to keep older people more well off than younger ones.

Back in the early 80's when I had friends and relatives getting mortgages in the 13-14 percent range and truly struggling my parents were really benefiting--they had no debt and had money to throw into certificates of deposit. It was a great time for them personally (FWIW, my father was a member of the Greatest Generation, my mother was several years younger but IDK what her "generation" was called). But here's what I see as a big difference -- as far as I recall nobody back then blamed them for it, or insinuated that they'd been a part of a "generation" that (somehow) colluded to set things up that way or had made (collectively) bad choices that had resulted in the situation. People my age just accepted the situation for what it was, griped about it to the few people we could actually talk to (no social media!), and got on with things as best we could. Nowadays people always want to play the victim and to have someone to blame. Social media has caused and fed that, and I really think it's hugely detrimental. In any economic situation since the beginning of civilization there have always been winners and losers, and there always will be. And more often than not things just evolve to be the way they are, not because some silly human defined "generation" wanted them to be that way.

[Heartstrings]

I’m curious, everyone who bought houses with 8-15% interest rate, what was your purchase price? Have you  checked recently to see how much purchasing power that amount gets you?  Can you still buy a similar house for that amount in thst general area?   If you had that same interest rate today could you have bought that house on the same salary? 
 

I just looked and there are some homes in the same area that could be bought for that price, but all need a lot of time and money put into them, definitely fixers and are all further out and in bad neighborhoods. I wouldn’t have had the extra money to put into rehabbing a house at the time.  Most things in that price range now are plots in new neighborhoods where you would build a new house.  
 

My old house would have been a real stretch on the income we had.  We bought it for $100k with 8% interest and it’s worth $175k now. 

 

 

Edited January 12 by Heartstrings

[Scarlett]

7 minutes ago, Heartstrings said:

I’m curious, everyone who bought houses with 8-15% interest rate, what was your purchase price? Have you  checked recently to see how much purchasing power that amount gets you?  Can you still buy a similar house for that amount in thst general area?   If you had that same interest rate today could you have bought that house on the same salary? 
 

I just looked and there are some homes in the same area that could be bought for that price, but all need a lot of time and money put into them, definitely fixers and are all further out and in bad neighborhoods.  Most things in that price rage are plots in new neighborhoods where you would build a new house.  
 

My old house would have been a real stretch on the income we had.  We bought it for $100k with 8% interest and it’s worth $175k now. 

 

 

I am not understanding why the comparison is on the same salary?

[Heartstrings]

27 minutes ago, Scarlett said:

I am not understanding why the comparison is on the same salary?

If you had that same income could you buy the same house for todays price? Or could a young person today on that salary buy a house with that same amount?   Because a 10% interest rate on a house that costs $50k is very different from 10% on a house that is $125k today, and trying to buy a house for $50k is very different today.  Trying to relate the conversation of “I had a 10% interest rate and it was fine” to what people are facing today.   
 

Maybe it would be better to adjust the income to todays dollars, I don’t know.  I was just thinking that looking at it a couple of different ways would be illustrative and interesting. There might be other ways to approach it too, I’m open to suggestions.  Those were just what jumped to mind first.

Just playing around with the idea of what would it look like to be starting out today, all fresh and shiny, excited to maybe buy your first house.  

Edited January 12 by Heartstrings

[Carrie12345]

1 hour ago, SKL said:

Hate to tell you, but coming in age in the 1980s wasn't exactly a piece of cake. 

Either a lot of boardies came from privileged backgrounds, or they don't have long-term memory of difficult financial times.

People talking like life was always easy until 2024.  It blows my mind.

I don’t think you can convince me that it’s the same. No, I don’t come from a privileged background. My parents both worked retail in the 80s; Mom at Dunkin Donuts (cashier) and Dad at a popular small toy store chain (assisted manager at one point.) With 3 young kids in our small purchased house in the burbs with our used, functional 2 vehicles and our little summer trailer second home and our bills paid even if nothing was fancy. 

Just TRY that today on $12/hr part time plus maybe $16/hr (if lucky) full time.

[Pawz4me]

5 minutes ago, Heartstrings said:

Trying to relate the conversation of “I had a 10% interest rate and it was fine” to what people are facing today.   
 

Did anybody actually say that? I’ve seen several comments about higher interest rates and struggling, but I missed any characterization of them being fine. But I’ve just skimmed quite a bit, so I definitely may have missed something. 

[SKL]

8 hours ago, Heartstrings said:

If you had that same income could you buy the same house for todays price? Or could a young person today on that salary buy a house with that same amount?   Because a 10% interest rate on a house that costs $50k is very different from 10% on a house that is $125k today, and trying to buy a house for $50k is very different today.  Trying to relate the conversation of “I had a 10% interest rate and it was fine” to what people are facing today.  

I don't think they're saying "I paid 10% and it was fine."  I think they're saying "life wasn't so easy back then either."  My parents struggled mightily trying to pay that house payment at 11.75% (the house itself cost 58K).  They had 6 kids and my dad had to drive over an hour each way to get to work until he found a new job nearer our new home.  There was absolutely nothing good about the economy back then, or in the following decade.  We couldn't even afford the natural gas to heat the house - filling the wood stove was one of my chores.  We used to bring blankets and sit around the living room since it was the only room in the house where we wouldn't freeze.  I could go on and on.

It would be a joke to try to compare our 1980s lifestyle to what young adults are being taught to expect today.  But not in the way you seem to be thinking.

Edited January 13 by SKL