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I agree that student loan debt will put people on the edge, but I also think young people's expectations are too high. A lot of people in my generation had student debt, but they had much lower expectations. Nobody I knew expected to buy a house in their 20s or early 30s. They were happy to have a car. We had roommates--not our own places--not until we were making better money, and some people did, in fact live with their parents to save money.
I know many people who worked waiting tables and bartending when they graduated (in the 70s) and there was a recession and no real career-type jobs. I really did not know anyone who was above restaurant and bar jobs, as their liberal arts degrees did not get them any further then they do now.
Some went back to school for an advanced degree. Others traveled the country and worked in seasonal jobs in restaurants and bars--as I did--it was fun. And nobody felt like they were 'broke', desperate or wanting for anything. We all ended up buying homes and working career positions later on.
Yes, the COL was lower, but wages were also pretty low. People simply were not as materialistic and did not expect or want as much as they do now. I do know people who had relatively the same student debt, so they did not live luxuriously and most had beat up used cars and rented.
Expectations and materialism are pretty high these days, and for some reason, many younger people think they need to buy homes. Lower expectations, stop needing the newest and best electronics or cars, and pay off the student debts as early as possible--things might work out. There is also the concept of 'sacrifice' now for a better future, but let's not go overboard.
So I am having a hard time understanding/processing all of the information we read out there relating to salaries, house prices, student loan debt, food costs, transportation, etc. Is almost everyone living on a financial edge? If you simply take the median household income of $61k, how are people paying for housing wherein the median price in the U.S. is around $300k? Hell, even if that median household income was $80k its still not enough!
After you had your mortgage, and some basic living expenses like food and gas for your car there is not much left over. How are you then paying student load debt, spending on other consumer products (e.g., consumer spending is at all-time highs), paying your car note (the car debt is at an all time high as well - over a trillion dollars), where the average car transaction sale is around $30k per KBB. Ohh and dont forget to save for retirement as well.
Curious to hear what other people think. I know the numbers above are not perfect, however, I would say they are accurate enough for this discussion.
"Is almost everyone living on the financial edge?"
Where I live (MN) it seems very few are living anywhere near "the financial edge". The vast majority are doing well to very well.
Originally Posted by StealthRabbit;55524859
Have you worked 50 yrs and saved up millions of $? Think you are ALL SET!:ok:
[B
ONE medical event, or liability lawsuit can 'Finish you off'[/b]
How about insurance? I have always carried a million in liability insurance that is a rider on my homeowner policy.
I have always had good health insurance and now with medicare I still have the same insurance as supplemental to medicare. Three years ago I spent 23 days in the hospital and got 8 weeks of chemo. The hospital bill was $375,000. I paid $1700 out of pocket.
The basic answer is YES - and this is our lack of a Universal Health Care system.
Yeah, that's a simple answer...but, bottom line, if we completely reformed health care this country would see economic (or happiness) growth we can only imagine. But we won't because money is more important than human beings here.
So I am having a hard time understanding/processing all of the information we read out there relating to salaries, house prices, student loan debt, food costs, transportation, etc. Is almost everyone living on a financial edge? If you simply take the median household income of $61k, how are people paying for housing wherein the median price in the U.S. is around $300k? Hell, even if that median household income was $80k its still not enough!
After you had your mortgage, and some basic living expenses like food and gas for your car there is not much left over. How are you then paying student load debt, spending on other consumer products (e.g., consumer spending is at all-time highs), paying your car note (the car debt is at an all time high as well - over a trillion dollars), where the average car transaction sale is around $30k per KBB. Ohh and dont forget to save for retirement as well.
Curious to hear what other people think. I know the numbers above are not perfect, however, I would say they are accurate enough for this discussion.
For us retirement savings is number 1. Our 403B accounts have been growing for over 20 years now and I plan to continue that for the next 20 years. Always pay yourself first. With a 401K plan the money comes out pre tax and with most of them you lose the employer portion if you don't invest. Still, 6% (The amount my employer requires to get the full benefit) is not enough to build a solid retirement savings. I am thinking 10% if you start out in your early 20's. I just increased mine to 15%.
House payment is number 2. Our home should be paid off in 6 years because we pay extra. Home prices in our neighborhood are over $500,000. A home similar to mine recently sold for $520,000. We bought almost 9 years ago and paid a lot less than what it is supposed to be worth. With housing realize that even if someone makes one amount that they could be selling another home to pay for a home they may be buying.
Basic living expenses are next. We are fairly frugal
We have student loan debt and should have that paid off in 4 more years.
"Is almost everyone living on the financial edge?"
Where I live (MN) it seems very few are living anywhere near "the financial edge". The vast majority are doing well to very well.
Some Northern states and regions are exceptions to the rule. As one example, in Florida - even in well off areas - something like 46% of the working population is "not making it" by basic definitions. That means they can't pay the basic costs of living. It would be reasonable to say another 10 or 20% or more on top of that are one major problem, accident or long illness away from same.
So, yeah, not "everyone", but from what I have seen it's at least 1/2 of people....
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Quote:
Originally Posted by TimtheGuy
"Is almost everyone living on the financial edge?"
Where I live (MN) it seems very few are living anywhere near "the financial edge". The vast majority are doing well to very well.
I agree. In our city of 65,000 median family income has never been higher, at $164,000, the better restaurants have lines at the door, $700-800k existing homes are selling fast, as are the $1.3 million new homes.
So I am having a hard time understanding/processing all of the information we read out there relating to salaries, house prices, student loan debt, food costs, transportation, etc. Is almost everyone living on a financial edge? If you simply take the median household income of $61k, how are people paying for housing wherein the median price in the U.S. is around $300k? Hell, even if that median household income was $80k its still not enough!
After you had your mortgage, and some basic living expenses like food and gas for your car there is not much left over. How are you then paying student load debt, spending on other consumer products (e.g., consumer spending is at all-time highs), paying your car note (the car debt is at an all time high as well - over a trillion dollars), where the average car transaction sale is around $30k per KBB. Ohh and dont forget to save for retirement as well.
Curious to hear what other people think. I know the numbers above are not perfect, however, I would say they are accurate enough for this discussion.
I think the difference these days is people are expecting to get a new car, a new house, a new smart phone, 2 international vacations a year with whatever salary they have as soon as they graduate college. Don't get me started on those who have a job at McDonalds, with the expectation to raise a family unit of 4 persons, have 2 cars, each member with the latest smartphone, and live in updated SFH etc but there is a clamor to get a $15 an hour wage at those jobs. My first job was at McDonalds starting at $3.75 an hour. I quickly learned, I did not want to work at fast food after that summer LOL
When I was starting out in my career, I shared an apartment with a coworker. I was driving a 8 year old Toyota Celica that I paid about $4k used. I was bringing in my lunch to work. I had a flip phone that I got issued for work. No school debt because I was working straight out of high school and skipped college. At 21, my expenses were pretty low, and my salary was low too at around 27K. This allowed me to be able to save money and invest in the company 401k. As my salary increased, my lifestyle inflation went up but I still managed to save and put away money.
I bought a house at 23 (50K salary) with my brother and my half of everything with utilities was $1200 a month. My salary kept going up and I kept saving and investing, but really my expenses didn't go up that much. By 2009 I had bought an investment property and that started cash flowing for me. By then, my salary was 72k but my really my expenses had not gone up.
At 2019 I have a 6 figure salary, max out my workplace retirement account, contribute to a ROTH-IRA and a brokerage account earmarked for my kid's future college costs. My wife and I are on the same page with being frugal and spending. Other than mortgage debt, we only have one car loan for a used Honda Odyssey that we just bought a few months ago. I think the balance is < $12000 and I'm already making extra payments on it.
I'm currently listening to a podcast who's tagline is, "You can afford anything, but you can't afford everything..." That really resonates with me...
I agree. In our city of 65,000 median family income has never been higher, at $164,000, the better restaurants have lines at the door, $700-800k existing homes are selling fast, as are the $1.3 million new homes.
So you live in an affluent socioeconomically segregated suburb. I've lived in gold-plated 5%er enclaves like that. Everybody you know at the office is high comp. Your neighbors are all high comp. Everyone who works the service sector jobs in your town lives elsewhere. Kind of by definition, only 5% of the country can be 5%ers and "almost everyone" is in financial circumstances where any health or employment glitch can wipe them out.
I've had enough wealth since my mid-30s where I could survive the catastrophes that wipe out many people. I experienced divide-by-2 divorce math. I've had years not working. I'm very aware how unusual that is.
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