The real problem is most Americans spend too much and don't save at all (student loan, buy)

[f_m]

Originally Posted by jimhcom

While I agree with the OP, the problem is not spending habits, it is overall stupidity. We have become a country of morons who do not know how anything works with the exception of our cell phones and remote controls.

Yes, especially if this is how people think.

"Even stranger, 32 percent of homeowners actually think the value of their homes has increased. 17 percent feel that their home's value has not changed. "

Homeowners in Denial Over Home Price Declines

[GeminiGal]

Originally Posted by f_m

Yes, especially if this is how people think.

"Even stranger, 32 percent of homeowners actually think the value of their homes has increased. 17 percent feel that their home's value has not changed. "

Homeowners in Denial Over Home Price Declines

Overall, I think your right. However, you never know. Two of the 8 houses that are for sale in my neighborhood actually sold (yes - bidding wars) for above asking price. One of those had only lived in the house a little over 3 years and they made $75K more than they paid for it - and this is in suburban Columbus OH. 3 of those are in foreclosure and are just sitting and priced to move! I think homeowners are in denial for this very reason, it is very hard to predict what your house is actually worth these days - that is until someone purchases it.

Each house out there is unique, regarless of region IMO. I am certainly glad I am not in the market to buy or sell. IMO, the real estate market right now is mind numbing.

[GregW]

Why should people save when the interest paid by conventional insured savings accounts has been less than inflation? That is just giving the bank your money. People had to put their money at risk in a house or the stock market despite the increased risk in order to get any real return. Well, the risk has hit and the returns have failed. Effectively the wealth of the fools that tried to save has been stolen. Just like in all the previous booms and busts.

Given the recent history the smart folks were the ones that bought as much durable stuff as they could on credit and bailed out of the real estate two years ago. So long as they can pay the usurious interest they will do fine.

[f_m]

Originally Posted by GeminiGal

Overall, I think your right. However, you never know. Two of the 8 houses that are for sale in my neighborhood actually sold (yes - bidding wars) for above asking price. One of those had only lived in the house a little over 3 years and they made $75K more than they paid for it - and this is in suburban Columbus OH. 3 of those are in foreclosure and are just sitting and priced to move! I think homeowners are in denial for this very reason, it is very hard to predict what your house is actually worth these days - that is until someone purchases it.

Each house out there is unique, regarless of region IMO. I am certainly glad I am not in the market to buy or sell. IMO, the real estate market right now is mind numbing.

There are lots of bidding wars, mainly on the low priced places, but prices overall are mostly lower than in previous months. There are always exceptions, and all the reasons may not be known. However, if the mindset is that it is someone else's home that is lower value but not mine, then I wouldn't expect such people to make good decisions.
There was another post in another forum a homebuyer made about his purchase process. Of the many homes he bid on and didn't get, a majority ended up later selling for around his bid price, but at the time he bid, the sellers did not accept the "low" offer, thinking the value of their own home was more.

[f_m]

Originally Posted by GregW

Why should people save when the interest paid by conventional insured savings accounts has been less than inflation? That is just giving the bank your money. People had to put their money at risk in a house or the stock market despite the increased risk in order to get any real return. Well, the risk has hit and the returns have failed. Effectively the wealth of the fools that tried to save has been stolen. Just like in all the previous booms and busts.

Given the recent history the smart folks were the ones that bought as much durable stuff as they could on credit and bailed out of the real estate two years ago. So long as they can pay the usurious interest they will do fine.

Most of the people who bailed out 2 years ago made out quite well and would have some money in the bank. I would say that durable goods depreciate more than money in the bank. The issue is whether the goods are necessary, if not, then it is excessive spending because they would lose value faster than they would be paid off on credit cards over time. A plasma TV bought 1 or 2 years ago has less value today given the better technology and price drop of new electronics.

The people who saved can go out now a get a great deal on cars because their savings will show they are acceptable for a 0% APR loan. Anyone who didn't save is less likely to get this kind of loan.

If someone bought a house to get a return, then they should be very careful in doing so. If they couldn't afford it in the first place then they took a big risk.

[GeminiGal]

Originally Posted by f_m

There are lots of bidding wars, mainly on the low priced places, but prices overall are mostly lower than in previous months. There are always exceptions, and all the reasons may not be known. However, if the mindset is that it is someone else's home that is lower value but not mine, then I wouldn't expect such people to make good decisions.
There was another post in another forum a homebuyer made about his purchase process. Of the many homes he bid on and didn't get, a majority ended up later selling for around his bid price, but at the time he bid, the sellers did not accept the "low" offer, thinking the value of their own home was more.

True - there are always exceptions. To my point, this current situation is just mind boggling and very unpredicable. Personally, I don't know of anyone that has lost a home so far. I know one person that has bought a home that was foreclosed on and they got a good deal on the home, but it is going to take alot of money to bring it up to par (again - opinions will vary).

As to the point of the OP, none of us know every personal detail of anyones financial situation. We know many of CD posters on this particular thread are savers, but to what extent? I think that is the reason our economy, as a whole, is in this current mess. It is impossible to know all the intimate details of a persons income, debt, saving habits, etc. I know there is all sorts of data out there that say we are a nation of spenders not savers, but in my personal network of folks that statement is not true 90% of the time.

Personally, my family financial situation is great. I am spending as usual, but I find my self often times at a psychological tug of war. I feel quilty when I spend and I feel just as guilty that I don't - I know it's crazy.

I know very few folks that "don't save at all" ...

[f_m]

Originally Posted by GeminiGal

True - there are always exceptions. To my point, this current situation is just mind boggling and very unpredicable. Personally, I don't know of anyone that has lost a home so far. I know one person that has bought a home that was foreclosed on and they got a good deal on the home, but it is going to take alot of money to bring it up to par (again - opinions will vary).

As to the point of the OP, none of us know every personal detail of anyones financial situation. We know many of CD posters on this particular thread are savers, but to what extent? I think that is the reason our economy, as a whole, is in this current mess. It is impossible to know all the intimate details of a persons income, debt, saving habits, etc. I know there is all sorts of data out there that say we are a nation of spenders not savers, but in my personal network of folks that statement is not true 90% of the time.

Personally, my family financial situation is great. I am spending as usual, but I find my self often times at a psychological tug of war. I feel quilty when I spend and I feel just as guilty that I don't - I know it's crazy.

I know very few folks that "don't save at all" ...

Here is the government chart on savings rates (somewhere in there must explain where they get their data).
BEA : Personal Saving Rate

As far as not knowing people, well it just depends on the circle of people you are around.

[Pug Life]

Originally Posted by unseengundam

Looking all financial problems going on right now, I am one big cause of it is the most Americans spend money like crazy. There seems only a handful of financially responsive people. Others just go out buy things they really don't need, even if they don't have money they just get Credit Cards, Loans, etc. Of course, most go buy expensive houses, multiple luxury car, phones, etc they really can't afford. Also, they don't have emergency cash. Which all leads to current problems.

I doubt, the problem will go away UNLESS everyone start acting financially responsible. People need to live within their incomes. They should buy only what need and put rest into savings / retirement funds. The US would be much better off if everyone was living a financially responsive life. Problem is people get attempted to buying what they want (Luxury house, cars, vacations, etc). Even if current problem is solved, it will come right back unless these irresponsible change their behavior!

How much do you make a year?
In a city like San Diego, a person can make $35,000 a year (which is above average) and still be in pretty bad financial shape. After taxes, that $35,000 is about $24,000, or $2,000 a month. Look below at a hypothetical financially-conservative person living in San Diego:
A 1 bedroom apartment costs at least $1,000 a month,
Gas and Electric costs an additional $100,
add in another $100 for basic cable/internet,
Car costs about $200 a month (a crappy car)
Gas is about $40 a week per person right now, so make that $160 a month
Food for will be about $10 a day, or $300 a month
Car Insurance costs $85 a month (CHEAP insurance)
Medical Insurance costs $100 a month (if company helps cover costs)
Right there, without ANYTHING at all frivolous, and most things being conservative estimates, an average San Diego resident will be spending $2,045 while earning $2,000. How can they not go into debt?

[stan4]

Sounds like that person needs a roommate or to move.

Hey, I'd love to live in Hawaii, but the reality is that I'm much better off financially where I am.

[Pug Life]

Originally Posted by f_m

I think people in this situation should start thinking about moving to a place with a lower cost of living. That's what many people are doing. Also, when the money was easy, that helped drive up the price of housing. SF is expensive to begin with, and not a place to try to live without a really good job.

Yeah, cause leaving a city where you have a job for a city where you don't is REALLY good for your economic situation...and what about the older people who saw the cost of living skyrocket beyond their retirement savings? Cities aren't designed to hold only rich professionals, they would not survive that way. What do you say about the doctor who has his assistant making $35,000 a year? SF has a lot of jobs, problem is, most just don't pay enough. Detroit is cheap to live in, but there are no jobs. See the problem with your little "just move away" plan?