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I hear you about the houses, trust me. My wife and I make what would be considered "upper middle class" anywhere else in the country, but here we would struggle to afford a modest colonial in a good neighborhood..you're talking close to 500K even with the current market, and that is out of our "conservative" price range according to most calculations...that's with no debt other than mortgage and a combined income of around $140K.
Now, the real estate folks here would say "you can afford that easily!!"
What if I lose my job? We'd be under water in 5 months. That's also a serious concern in this economy.
Hence, we live in a 2 bedroom condo.
If we had more sane people like you, we wouldn't have gotten into this housing mess. I still want to throttle every Newsday cover story of the family with the mother who insisted on staying home with the kids, and who's husband worked intermittently in construction clearing 40k a year who put 2k down on a 340 house and were crying about the housing downturn...grrrr.
5 months is a decent cushon but I wouldn't say its ideal. Everyone who is 1 paycheck away from Bankruptcy is nuts....
I think I'm somewhere in the 5-6month cushon, but it doesn't seem like enough. I don't look at it as a cushon, I look at it as savings. Its taken far longer than I hoped to get there.
Maybe its just an entitlement complex. We all feel entitled to a nice house and car after working hard. Seems to be what has gotten us into the mess.... but is that really wrong to feel that you work hard you should be able to afford a nice decent size house?
5 months is a decent cushon but I wouldn't say its ideal.
Suze Orman, who a friend of mine turned me on to a few months ago, always says you need an 8-month cushion. I think she's right.
Let's face it: In the current lousy job market, a 12-month cushion would be ideal. I could see it taking that long for many people to find something permanent (not merely a McJob to stave off starvation), depending on their field and experience. How many people do you know who have been keeping their eye out for a more appealing job for a year or more? Quite a few, I'd bet.
Also, IMO if you are over 50 you need at least an 8-month cushion because the older you are the harder it is to land a job, unless you have some serious executive/management background. For the vast majority of jobs, though, employers would rather hire younger people. They'll cloak it in various other reasons but the age discrimination is still there in many many instances.
Another pitfall for us over-50s Baby Boomers is that many didn't get a Bachelors degree and very few got a Masters. Hey, when we went out into the workforce in the late 1960s, it's wasn't the necessity that it is today. We've got decades of real-world experience but no "sheepskins". Sadly, just look at the job requirements nowdays: a BA or BS is what a highschool diploma used to be in the 1960s and 1970s ..... the basic requirement. Lots of employers don't care diddly about your experience, they just blow you off as soon as they hear you don't have at least a Bachelors (it's also a handy excuse to sidestep the age discrimination thing).
That's why IMO if you're over 50, you'd better have an 8-12 month cushion just in case....
Yes, sad but true. Unfortunately, hard work does not necesarily equate to financial advancement. I think that you did the right thing by buying your condo, because over time you will build up the equity needed to purchase a single family home.
Not to push my own self-interest, but I truly believe that home ownership is a critical step in achieving life long financial security. And, it's always been a stretch for first time home buyers. It was a stretch for my father to buy his $8,000 house in 1960 and it was a stretch for me to buy my $170,000 house in 1989.
What has gotten the US in this mess is our horrible savings ratio. People want to continually blame government without taking accountability for their own actions.
Our society simply does not save its money anymore. The savings ratios in Europe and Asia dwarf those in America. We've become a culture that needs the newest and biggest things right away....whether we can afford it or not. We created a middle class that thinks and acts as if it is the rich. (Bigger homes, bigger cars and SUVs, beach houses, nice vacations, eating out all the time, lavish parties for the kids, etc.)
Frankly, any family making over 100k combined in LI should be able to live fine if they cut out the "fat". It's easy:
1. Buy a house you can afford. You don't need a McMansion.
2. Drive a smaller fuel efficient car. A Honda Civic can be had for a good price.
3. You don't need a vehicle for every member of your house. Take more public transportation. It's not "beneath" you.
4. Only eat out on special occasions. Cook your own food. It's cheaper and healthier in the long run.
5. Cut down on your electronic gadget purchases. Do you really need a 10 megapixel camera? 2/3 HDTV's? A home theater system with Dolby TrueHD?
6. Cut down on the clothes shopping. Shopping is the new religion in America. Weekend worshippers spend hours in the stores on weekends like zombies running up their debt. Why? They are bored with life and unhappy. Find a real hobby.
7. Limit your vacations. I'm not saying don't ever go away...but instead of the expensive trip to Europe or the Caribbean....take a weekend drive to New England or the Adirondacks...or drive up to Montreal. Fun can be had on the cheap.
8. Don't spoil your kids. THIS IS THE NUMBER ONE PROBLEM I SEE. Parents love their kids, but they show that love in all the wrong ways at times. I think our society feels guilty that it isn't at home more and so they try to make up for it by bombarding the kids with gifts and lavish parties. You are only HURTING your kid by doing this. Believe me...you are creating an adult that will have faced no adversity and who is flooded with a sense of entitlement.
Ask yourself another question as well...why are certain immigrants who come here with nothing doing so well...Italians, Greeks, Indians, Koreans, Persians, etc?
Those immigrant communities had and have VERY high savings ratios.
5 months is a decent cushon but I wouldn't say its ideal. Everyone who is 1 paycheck away from Bankruptcy is nuts....
I think I'm somewhere in the 5-6month cushon, but it doesn't seem like enough. I don't look at it as a cushon, I look at it as savings. Its taken far longer than I hoped to get there.
Maybe its just an entitlement complex. We all feel entitled to a nice house and car after working hard. Seems to be what has gotten us into the mess.... but is that really wrong to feel that you work hard you should be able to afford a nice decent size house?
I think what has been lost is that working hard might mean the house comes 7 years down the line. My generation has zero patience (35-40+). We tend to look back at our parents (baby boom) generation and revere their concept of "paying your dues" but aren't always so keen on waiting or making those same sacrifices (not necessarily including you in that statement). Young people, maybe two years out of college, often leave the area because they want to buy a house. That is still, regardless of where in the country you live, a pretty aggressive time table for home ownership. No matter what decade we are talking about. Patience is no longer a virtue, and there is a lot of entitlement out there. My parents put on the big "addition" after they were in the house over 10 years. I find it hard to come across couples in my age bracket who are okay waiting over a decade to make home improvements aside from the needed ones of an old roof, furnace, etc. Home buyers now move in and rip it all up. Easy credit made that easy.
Long island is still very expensive, always will be, but the entire economy could benefit from a more savings oriented mentality and a comfort with owning a used car and waiting on putting in those shiny new hardwood floors. What is wrong with formica by the way?? When did that become something that just had to go...?
What has gotten the US in this mess is our horrible savings ratio. People want to continually blame government without taking accountability for their own actions.
Our society simply does not save its money anymore. The savings ratios in Europe and Asia dwarf those in America. We've become a culture that needs the newest and biggest things right away....whether we can afford it or not. We created a middle class that thinks and acts as if it is the rich. (Bigger homes, bigger cars and SUVs, beach houses, nice vacations, eating out all the time, lavish parties for the kids, etc.)
Frankly, any family making over 100k combined in LI should be able to live fine if they cut out the "fat". It's easy:
1. Buy a house you can afford. You don't need a McMansion.
2. Drive a smaller fuel efficient car. A Honda Civic can be had for a good price.
3. You don't need a vehicle for every member of your house. Take more public transportation. It's not "beneath" you.
4. Only eat out on special occasions. Cook your own food. It's cheaper and healthier in the long run.
5. Cut down on your electronic gadget purchases. Do you really need a 10 megapixel camera? 2/3 HDTV's? A home theater system with Dolby TrueHD?
6. Cut down on the clothes shopping. Shopping is the new religion in America. Weekend worshippers spend hours in the stores on weekends like zombies running up their debt. Why? They are bored with life and unhappy. Find a real hobby.
7. Limit your vacations. I'm not saying don't ever go away...but instead of the expensive trip to Europe or the Caribbean....take a weekend drive to New England or the Adirondacks...or drive up to Montreal. Fun can be had on the cheap.
8. Don't spoil your kids. THIS IS THE NUMBER ONE PROBLEM I SEE. Parents love their kids, but they show that love in all the wrong ways at times. I think our society feels guilty that it isn't at home more and so they try to make up for it by bombarding the kids with gifts and lavish parties. You are only HURTING your kid by doing this. Believe me...you are creating an adult that will have faced no adversity and who is flooded with a sense of entitlement.
If everybody spent like my wife and I do, the economy would have tanked YEARS ago. The only thing propping it up after 9/11 was the housing bubble, which was a mirage of people buying overprice assets with bad credit.
The truth is, the economy has been going down for decades..the internet and housing bubbles, and the success of the finance sector (making money moving money, not actually creating anything) created short term uphoria that everything was great, propped up income levels, kept the housing market flourishing here on LI because there was always someone making a big salary who could buy that overpriced house.
But the real truth is that since our manufacturing base has declined, so has our standard of living. What's happening now is simply the chickens coming home to roost. Even what happened with Reagan back in the 80's..it was all deficit spending by the government on defense, something that had little or no real return.
If everybody spent like my wife and I do, the economy would have tanked YEARS ago. The only thing propping it up after 9/11 was the housing bubble, which was a mirage of people buying overprice assets with bad credit.
The truth is, the economy has been going down for decades..the internet and housing bubbles, and the success of the finance sector (making money moving money, not actually creating anything) created short term uphoria that everything was great, propped up income levels, kept the housing market flourishing here on LI because there was always someone making a big salary who could buy that overpriced house.
But the real truth is that since our manufacturing base has declined, so has our standard of living. What's happening now is simply the chickens coming home to roost. Even what happened with Reagan back in the 80's..it was all deficit spending by the government on defense, something that had little or no real return.
I disagree. I think the market fundamentals since the 80's have been sound. We've created many many service sector jobs in biotech, IT, healthcare research, etc.
The problem is that the economy was artificially propped up beyond what it should have been by credit. Some correction was needed, and I'm glad it's happening now.
The traditional manufacturing sector is gone. It's long gone and it's never coming back. I don't know why so many people have a difficult time grasping this. The US simply cannot compete with its cost of labor to produce many of the items we have in the past.
What we need to focus on now is the future....robotics, nanotechnology, new forms of producing energy, etc. Traditional manufacturing is dead. This is economics and advancement. Old industries throughout all of time have had to make way for new ones. In the interim, there is a lot of pain for these old industries, but it is the price of progress.
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