Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
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.
Trying to go back on-topic rather than join the snipe-fest, I’d point out that the home ownership rate is 64%. You can’t directly use median home price and median income. 60th percentile household income is 80k. A $300k home with a 5% down 30 year mortgage, $1k in insurance, and a $15 mill rate you can qualify for a mortgage on $80k and stay within the old school 28% limit. A 4% 30 year fixed mortgage on $285k is $16.3k. $4,000 in property taxes. $1k in insurance. $1.5k for PMI. About $23k in housing cost. If you save up $60k by living austerely, you’re borrowing $240k and not paying PMI. A $300k home would be comfortable on 20% down at $80k household income. Of course, that means driving a beater car, cooking your own food, no iPhone X with unlimited, or 300 channels of garbage on the TV for some years. That’s how the middle class lived in 1965.
I live in a blue state where the minimum wage will be $15/hour in 2023. You can’t buy a house in a nice suburb commutable to the Boston jobs but a married couple at near-minimum wage is making a combined $60k and can afford a starter home somewhere like New Bedford in a safe single family home neighborhood. Like usual, the lesson is get married, stay married. Poverty unless something is drastically wrong with your health is reserved for single mothers.
Also the median home price is actually closer to $226,000 according to Zillow, $300,000 according to Realtor.com, and $240,000 according to Kiplingers, so the numbers are all over the place between $200 and 300K, depending on their sources and how they compute their numbers. If you look at the chart on this webpage:
You can see that several high priced cities are outliers that skew the national median. In fact, 52 out of the 100 top metros in the list have median prices below $200K. Only 14 out of 100 top metros have a median price above $300K.
A $200K home with 20% down (40K) at 4% 30 year mortgage results in a payment of $1018, excluding property tax and insurance. Property tax is HIGHLY variable dependent on your state and city. Seems pretty good compared to the high rents I am seeing quoted on this forum.
There are also several First Time Buyer programs that allow you to get a loan with far less than $40k down payment. FannieMae has a program for new homeowners with a 3% down payment. USDA has loan programs for some rural and suburban home purchase at 0% down, and programs for low-income homeowners, even those with lower credit scores. VA loans for veterans feature 0% down if you want. Of course the less you put down, the bigger the monthly payment, but in many parts of the country homeownership is do-able for those with moderate, even low, incomes. The buyers' debt balances will be considered in approval of the mortgage, so paying down CC and student loans would be necessary to qualify.
Last edited by TheShadow; 07-07-2019 at 09:52 AM..
.......... of those who are so smug about the poor being worthless. .......
I don't think the poor are worthless. I think that they have found their own comfort level and don't want to move out of it. After all, the world needs burger flippers and cashiers, too.
My only quibble about the poor is when they whine about how they aren't getting their fair share of the pie. You want your share, work for it. Otherwise if you are happy with a job where you take no responsibility, or you don't have to work long hours, or you don't have to make decisions, that is your choice. Just be resigned to the fact that you can't have a million dollar house and 2 weeks at Disney World every year for your kids,.
Have the decency to admit that you have made that choice all by yourself. No one has robbed you.
We didn't feel like we were living on the financial edge until medical bills wiped us out. Then we started over again with a new perspective. Working had to feel like retirement. Offgrid became very desirable though we'd always wanted to be much more self sufficient.
Our property cost 51K for 20 acres. About 50K to build the house
Realtor had 10 calls while in Southern California for a conference but I just happened to get her while driving on the freeway answering her cell. At first she was exhausted and said she'd get back to us cutting me off. Then i interrupted her. Suddenly she had time to drive to our home and sign the papers that night when we offered full price and would use her as our realtor. Double commission. My fear was someone would offer more than what the property was worth and get it.
She never had time to fully listen to her messages of others calling about the property
We Mtn Biked by that property for a while. Been eyeing that area for a year while attending church up there then mtn biking afterwards. Saw the spring and even during the California drought, water remained coming out. The surprise Bonus was... County records from 1970 showed a 2 bedroom/1 bath home and property remained in the family ever since though no one ever did anything with it. Owner passed away so the estate sold it. If inspectors ever visited, we would only be a remodel saying there was a home or one wall still standing. Not a new home built in which the permits would cost way too much for our budget.
We had a well drilled but it likely wasn't needed. Sort of as a favor to me since I was fearful of the Calif droughts thus running out of water.
30 min to get to the closest town, 40 min to the other town. Very dangerous county road but that's why it's inexpensive and the town hardly grows. County doesn't want any growth. It's a beautiful recreational area. We are blessed!
I don't think the poor are worthless. I think that they have found their own comfort level and don't want to move out of it. After all, the world needs burger flippers and cashiers, too.
My only quibble about the poor is when they whine about how they aren't getting their fair share of the pie. You want your share, work for it. Otherwise if you are happy with a job where you take no responsibility, or you don't have to work long hours, or you don't have to make decisions, that is your choice. Just be resigned to the fact that you can't have a million dollar house and 2 weeks at Disney World every year for your kids,.
Have the decency to admit that you have made that choice all by yourself. No one has robbed you.
An unremunerative low-end job isn't necessarily the result of lassitude or bad personal choices. And it is quite possible to have a job that requires considerable intellectual vigor and responsibility, despite paltry paycheck. An example would be adjunct-professor. Let's please cease with the canard that the poor are poor entirely because they've deliberately accepted a life of mediocre aspirations.
At the same time, it's fallacious to claim that nearly all of the "middle class" is one or two small jolts away from descent into poverty. Yes, there are many insecure aspirants whose Mercedes is only one month's missed-payment from getting repossessed. But the number of people who pay cash for such things, with plenty left over for investment or other indulgences, isn't just 1%.
Both extremes are wrong. It is neither the case, that the poor are hapless rubes indifferent to progress, or that the McMansion set is one missed-paycheck away from eviction.
It is amazing that this thread lives on. As noted by others, "This thread is about what percentage of people are on the financial edge."
That's been addressed. The answer is "Not many and far fewer than there used to be because the economy is as good as it has been in memory" -- except in the rhetoric of presidential candidates, who can be excused for lying because, well, they are politicians.
What can't be excused is otherwise intelligent people who look at data, throw it out, (or never even look at the data in the first place) and say to themselves, and post on C-D, "Kamala Harris, Cory Booker, Elizabeth 'Pocahontas' Warren, Bernie Sanders et. al. are right because, well, I want them to be right 'cause that helps them whip up the politics of envy and class warfare which could help them get elected."
An unremunerative low-end job isn't necessarily the result of lassitude or bad personal choices. And it is quite possible to have a job that requires considerable intellectual vigor and responsibility, despite paltry paycheck. An example would be adjunct-professor.
An adjunct-professor is a liability unto themselves.
If you're not on tenure track, then you don't belong in academia.
Since I've only ever posted on the econ forum on a handful of threads in the past 7 or 8 years on C-D, I don't think that would be me. I've never taken any econ classes, and have never read any econ blogs, so again, not me.
At least I didn't post thousands of words blaming the economy, marketing, the government, and anybody but themselves for the financial difficulties they've encountered. Marketing can make you want something, or make you think you need it, but it doesn't reach into your pocket and pull out your wallet. If you want a thread about the evils of marketing you should start one.
One has to accept some responsibility for themselves, or at least realize that there are ways out of this situation, but they come from within and won't occur unless the individual takes control of their own spending. There are many ways to end up on the edge, and many aren't of one's own making (illness, sudden job loss, etc) but there is a way off that edge, and that's what I'm focusing on.
You could always just put me on ignore. I suggest you do so, that way you won't have to suffer through my comments.
There is a fantasy that wealth and luxury are the natural order of things, but it didn't happen that way in my life. It takes decades to build wealth, and if you don't have a plan it will never happen.
If you can shave even $10,000 a year out of discretionary spending and invest that in savings, you can build substantial wealth over 40 years. If $10,000 is too much, try $1,000, but you have to start. That requires being broke a lot, but there is a world of difference between being intentionally broke and being poor.
The reason us old folks sound so much like a broken record is that being intentionally broke works. For low income people, that is the only way to build wealth.
One of the road blocks to building wealth is indeed marketing, but that's not the only one. Lack of planning is even more important. We all know of people with a substantial income who are living on the edge. Bad planning.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
