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There are two problems with this in my view - a. Insane taxes imposed by the government b. The fact that people are willingly buying assets that cost them so much. I call it the "rich wanna be" effect. A lot of people try to get the more expensive items, leases, etc, in order to appear wealthier, especially in NYC.
It's sad that people don't save enough. I just graduated with an MA this summer and started working full time in September. I have a considerable amount saved - about 5 of my monthly salaries - because I am paying off loans and I know that if I lose my job, I will still have to keep paying off those school loans.
I studied economics in undergrad and grad school. Basically people spend to maximize their own utility/happiness. But, if our current generation stopped for a bit and saved more/spent less for some time, not only would they benefit, but future generations as well. Then why don't people do it? Basically a form of selfishness and caring for the wellbeing of oneself more than of others.
There are two problems with this in my view - a. Insane taxes imposed by the government b. The fact that people are willingly buying assets that cost them so much. I call it the "rich wanna be" effect. A lot of people try to get the more expensive items, leases, etc, in order to appear wealthier, especially in NYC.
It's sad that people don't save enough. I just graduated with an MA this summer and started working full time in September. I have a considerable amount saved - about 5 of my monthly salaries - because I am paying off loans and I know that if I lose my job, I will still have to keep paying off those school loans.
I studied economics in undergrad and grad school. Basically people spend to maximize their own utility/happiness. But, if our current generation stopped for a bit and saved more/spent less for some time, not only would they benefit, but future generations as well. Then why don't people do it? Basically a form of selfishness and caring for the wellbeing of oneself more than of others.
I will add most folks are just plain financially ignorant.
a penny saved is a penny earned but unless you take an interest in investing and planning it will always be a penny. real wealth is developed over decades of capital gains not the little bit we manage to save from our pay.
it is that little bit we manage to save that compounds and grows. . .
Agree with craigs being second tier. Still rents are attractive. IMO still beats buying into a lifestyle that cannot be sustained especially in times of personal crisis.
I agree that it isn't just the destitute who we know have no cushion, it is an epidemic with those who have decent paying jobs too. And that's not to say they can't manage their money well necessarily, but the cost to live in this city like a human being (or as close to it as possible) drains away savings.
For those who live in this city, it should come as no suprise that many people live on the edge, and any unexpected expense, job loss, death, etc leaves them 30 days from borrowing from friends and family/not paying rent and even bankruptcy/government assistance etc.
And I agree with mathjak...that if you cannot consistently maintain 6 months of living expenses (including everything), then you should definitely not be a homeowner in NYC. People stretch too far, and get caught up..it happens to the best of us.
Since the vast majority of NY'ers don't own to begin with,the lesson is not necessarily about not owning unless you can maintain a 6 month cushion.The lesson for most NY'ers should be about not spending more on rent than will allow you to build and maintain a comfortable savings cushion.
The bigger problem in NYC is people getting way over their heads financially in order to live in neighborhoods they really can't afford to live in.
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