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The government changed the way they calculate inflation, once in 1980 and then again in 1990.
Each time, after changing their algorithm, inflation was lower.
Officially, Inflation today is 2%
If you use the 1980 algorithm, inflation today is 10%.
If you use the 1990 algorithm, inflation today is 6%.
(shadowstats figures)
Seems to me it's much harder for a young person to save today than it was decades ago.
It is and it has nothing to do with cell phones which is the inevitable mantra brought up by the aging internet warrior trolls.
It has to do with rent, healthcare, transportation, etc. Real life expenses are much more expensive now then they were 40 years ago. Consumer junk is much cheaper. Not a good trade off but that's what' you've gotten with a global economy and Walmart.
In other countries, it's drowning in the cost of living.
Read the book "Millionaire Next Door." I am sure you can buy one for a few dollars or better yet borrow one from your library.
1. Live below your means.
2. Don't buy the rock concert ticket when you can't afford $4,000 medical expense! Don't do that. The rock concert can wait until you don't sweat on $40,000 bill.
3. Don't borrow any money. Save all the money until you can pay it off and then buy what you need, not what you want. Do you really need to live in a 4 bedroom house? I was raised in an one bedroom apartment with shared kitchen and toilet, no shower/bath.
4. Don't have kids until you can fully fund him/her through college with your existing money!
Please ignore me if you are here just to whine.
Save, until you can buy a house cash......that means you'd pay rent, which is typically as much as a mortgage would be, except that it is money thrown away. None of it is equity. Bad advice.
Don't have kids, don't go out.....
I know lot of people who are very well off financially, but none followed advice like what you offer, and I doubt you did either.
I am glad I bought a house as soon as I could, and was able to pay off the mortgage quickly, and guess what, I've had a blast along the way. Everyone should treat themselves with a $50 dinner, or rock concert every now and then. Life is not supposed to be miserable.
I know the government says inflation is only 2%, but no one in their right mind believes that number. I'm a Millennial and feel like bills are exploding. I had a 1-hr visit to the ER, didn't even have surgery (just an IV, a lab and an EKG test) and the cost was over $4,000. The amount of crazy bills I get is laughable. Even buying a ticket to a rock concert will come with a $50 "service fee" attached to it.
That's why I don't live in NY anymore. Cost of living is disgusting.
If you're all about the feels, what's fair, and helping, don't cry about the high taxes...
Save, until you can buy a house cash......that means you'd pay rent, which is typically as much as a mortgage would be, except that it is money thrown away. None of it is equity. Bad advice.
Not quite true. Interest, HOA, property tax, house maintenance, insurance, electricity, water, yard maintenance etc. are all money throwing away.
The only time it makes sense to buy than to rent is if all the above costs together is less or equal to the rent, and if the house doesn't depreciate.
Quote:
Originally Posted by Finn_Jarber
Don't have kids, don't go out.....
I know lot of people who are very well off financially, but none followed advice like what you offer, and I doubt you did either.
Where did I say "Don't go out"? I said don't go out buying $50+ rock concert ticket when you can't even afford a small $4,000 bill.
Where did I say "Don't have kids"? I said don't have kids until you can fully fund your kids.
Save, until you can buy a house cash......that means you'd pay rent, which is typically as much as a mortgage would be, except that it is money thrown away. None of it is equity. Bad advice.
Don't have kids, don't go out.....
I know lot of people who are very well off financially, but none followed advice like what you offer, and I doubt you did either.
I am glad I bought a house as soon as I could, and was able to pay off the mortgage quickly, and guess what, I've had a blast along the way. Everyone should treat themselves with a $50 dinner, or rock concert every now and then. Life is not supposed to be miserable.
Rent in my area is typically MORE expensive for the same quality of residence. I was paying 1100 a month for a 1700sq foot apartment, about to see another 100 dollar increase if I renewed my lease again, before I moved into a 2600sq foot house for around 1250 a month mortgage.
Quote:
Originally Posted by lifeexplorer
Not quite true. Interest, HOA, property tax, house maintenance, insurance, electricity, water, yard maintenance etc. are all money throwing away.
I have probably put about 15-20k total worth of non recupable expenses into my house over the 6 years I have been in it, meanwhile I am up 85k on the value of the house and have 10s of thousands of dollars worth of equity built up... do the math. Even if the house price had remained completely stable I would still be up financially, not to mention the improved independence and quality of living from owning a house that is much nicer than what I would have if I payed the same amount in rent.
Rent in my area is typically MORE expensive for the same quality of residence. I was paying 1100 a month for a 1700sq foot apartment, about to see another 100 dollar increase if I renewed my lease again, before I moved into a 2600sq foot house for around 1250 a month mortgage.
I have probably put about 15-20k total worth of non recupable expenses into my house over the 6 years I have been in it, meanwhile I am up 85k on the value of the house and have 10s of thousands of dollars worth of equity built up... do the math. Even if the house price had remained completely stable I would still be up financially, not to mention the improved independence and quality of living from owning a house that is much nicer than what I would have if I payed the same amount in rent.
Read Post 19 please.
Also only realized gain is a gain. If you don't sell your house, you can't claim you have that money as you may not have it when you want to sell it.
Not quite true. Interest, HOA, property tax, house maintenance, insurance, electricity, water, yard maintenance etc. are all money throwing away.
You pay water and electric if you rent, so no difference there. A mortgage includes insurance and tax, so yes, its pretty much the same expense to rent or buy.
Quote:
The only time it makes sense to buy than to rent is if all the above costs together is less or equal to the rent, and if the house doesn't depreciate.
No. Renting is 100% money thrown away, and owing is basically same as putting money in the bank, so even if owing cost little more, it still makes sense.
Not necessarily. Each market must be calculated differently.
Here's an example. Assuming 4% interest rate, 20% down, $1000/year HOA and 3% property tax, your $190 K house sold 6 years later for $275 K would net you a negative $4,000 - you would be losing money.
This is not straightforward at all. For the vast majority, it's better to rent until they can pay it in full.
Ok, and if I was paying the same in rent, for a worse residence, I would be down 6 * 12 * 1250 = $90,000.
Thus, my $4000 loss is actually a $86,000 net gain. You can't just evaluate the value of the house in a vaccum, you have to compare it to the viable alternatives.
Lets say I scaled way down, and lived in a $400 a month one bedroom sh*thole in the ghetto. I would still be down 6 * 12 * 400 = $28,000 vs $4000, and my quality of life would be completely miserable.
What the unintended message of your math is, is that I basically just secured a nice house to live in for 6 years for ~$55 bucks a month. Not bad.
Quote:
Originally Posted by lifeexplorer
Read Post 19 please.
Also only realized gain is a gain. If you don't sell your house, you can't claim you have that money as you may not have it when you want to sell it.
Sure, but the housing market where I am at is insane so I am not TOO worried about that.
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