Well there is reality. Back in 75 when we wanted to build a house, the bank required a 50% down payment. They weren’t making many loans then for first timers. A year later, the price had gone up about 30% in one year but the down payment needed was only 20%. That we could do since we owned the lot and did some work ourselves. The thing is by waiting, prices were going up every year and the lines would never cross even if you saved everything you earned. So the smart thing was to get into a house as fast as possible and lock the price in.
Paying cash is nice but like said, starting out just usually not possible without an inheritance, CEO job, or winning the lottery that didn’t exist then. Plus, also as said, it is not always smart to pay cash when you have an appreciating asset and can make more with your money that it costs to borrow. Just personal finance 101. Makes you feel better fine, just don’t think it is the most economical thing to do.
I grew up in SoCal. My aunt and uncle raised 5 kids there. All my cousins there stayed living at home until they were 26-29 years old, because that’s how long it took to become established in a decent paying job and to save enough for a decent down payment.
The average home value in the Seattle area is now $700,000. Even in Tacoma that number is around $300,000. Talking about expecting people to pay cash for homes is ridiculous.
Bingo! One has to do whatever it takes to get the job done, including but not limited to relocating.
When I hear that people live in an area that is so expensive that nobody can live there I wonder how long it will take folks to get the heck out.
My wife and I learned new skills (changed vocations) AND relocated in order to get it done. That’s what they make grown-ups for. People who make excuses instead of acting should practice those excuses every chance they get. They’ll be needing them. CSA
Out of curiosity I just ran some numbers and found that the average used car price is ~$20,000 and with good credit can be financed for 7.5% which would result in a $622/mo payment on a 3 year note. And without the currently subsidized dealership 0 to 1% financing the average new $35,000 car financed for 6 years at 7.5% would cost $600/month. It’s difficult for me to imagine paying $600 per month for an automobile and for most of my life I lived comfortably earning more than the national average.
Of course for many there is a substantial trade in to consider which would lower the amount financed but the more I look into this situation the more I am amazed at the amount of money the average American spends on their automobile relative to their income and living expenses. I looked up census figures and wonder how any family earning below the national average can ever get ahead and how they can buy even a stripped down car for basic transportation.
Every new car purchased results in another new “used car” for me to buy. A few decades ago cars were worn out when they hit 100K miles. Now they’re just getting broken-in. I buy those for 5 grand and drive them for 10 to 20 years (and that’s in a state covered 2/3 by salt). (2/3 of the year, that is). CSA
Every single person I’ve talked to that has retired recently, or will do so in the near future, is moving out of state. They’re selling their house and paying cash for a house in another state. In many cases, they’re moving to places where land is far cheaper and/or to places with less taxes
I often look around and consider how I have benefited from being given all the dirty work when I was growing up. When my water heater went out on a Friday recently I drove my old pickup to buy a new one and all the necessary pieces to install it. The new one was electric and the old was gas and the new was installed in the basement instead of upstairs where the old one was. A double pole breaker, 10ga with ground Romex fished through the walls up and down stairs, plumbing etc and it’s done. How do average income people who are unwilling and/or unable to do anything other than the work at the jobs survive? I can buy and maintain an older model vehicle and make the normal repairs on a house even though I could pay to have things done. I prefer to have the work done to my liking and at my convenience in doing so I save some money… For the life of me I don’t understand how people are able to get by financially when they cannot manage their money and are basically helpless dealing with the normal problems with cars and homes.
Uh, well, I can’t speak for anyone else but I’m doing exactly that–doing what it takes to get the job done. And that means financing a house. There’s no way I would move somewhere that has snow/salt on the ground 2/3 of the year. I wouldn’t live there if you gave me a house for free. My wife and I have chosen where and how we want to live and raise our family and we’re doing it. Changing professions and locations for a better price on housing would be giving up and walking away from our hopes and dreams.
When I was a kid my grandparents bought a brand new car. The only one they ever did. Grandpa was a Buick man, had to be a 2-door, always bought a trade-in. But grandma loved that green 74 Impala when she saw it. She had scrimped enough money to pay half, and had a 2 year loan for the balance. I remember her talking about it, she (and many other Depression era folks) said she had lived through some horrible times and learned that if something you really want is within your reach, get it now, because tomorrow it may all be gone. Now I’m not advocating that everyone go out and sign a car loan tomorrow, but living beneath your means should mean you get to enjoy the fruits of your labor once in a while, before you’re too old to.
Isn’t that how you and I make a living? We maintain and repair cars for people who can’t do it themselves. I did ok for the eight years I ran my own place, I think you came out of your business in fair shape too, if I recall from your postings here. I can’t speak for you, but my experience was that my best customers weren’t the wealthy ones, they were the working class families who entrusted me to take care of their aging cars.
I think the idea is that we all do what we do to earn a living, and then spend part of that money paying others to do what they do for a living. I can’t make my wife a new pair of glasses so we pay for it. I can’t (or won’t) repair my sprinkler system so I pay to have it done.
BTW, how were you able to get a remodeling permit from the county on a Friday and have the inspector come out and approve the new water heater and electrical circuit on a weekend? I mean the county employees rely on us to provide them an income so they can pay us to fix their cars…
Hindsight is 20-20. Silly me… I have a pension from a career that lasted over 30+ years. Now I’m reading about people who located to areas with higher costs of living than where I worked so they could build a larger pension. Once they retire then they move (with their larger pension) to an area with a lower cost of living.
I toughed it out for a mid-range pension in an area of mid-range cost of living. I guess that made it possible for me to afford to live comfortably and save money while I worked and lived there, though.
At least I consider myself clever enough to wait until age 70 to max out my Social Security (if I don’t get hit by a bus or something, first). 275 days, but who’s counting?
It seems by the time you get it all figured out for the future, the future is in your rear-view mirror (objects may be closer than they appear). CSA
Now that I’m retired I have too much time and in my area the inspectors don’t seem to know any more than me @asemaster. And you are right that most of my private business was from middle income working people and quite a few worked multiple jobs to make ends meet. I’m glad they paid their car repair bills for sure.
And by the time I was in my first home I realized how lucky I was to know how to replace a toilet and repair a central HVAC system in the middle of the night @common_sense_answer. The poorest people are the ones who are unwilling and/or unable to do anything to better themselves whether its putting away a few bucks for an emergency or taking care of the CEL problem before they are stranded. Many were raised in an intellectual and utilitarian vacuum but quite a few just expect everything to work out somehow.
But back to the cars in a tight economy. I’m wondering if an improved seat belt system will be lobbied to replace air bags in base models? Likewise will stability controls be dropped from those cars? Or maybe no one sees the handwriting on the walls that has been bleeding through at my house for quite a while.
I was living in Santa Monica, I wanted to own a home, I couldn’t afford one, so I moved to Albuquerque, where they’re cheap, as is the case in most of America.
Cars sold in Mexico are now available with airbags, I don’t see the U.S. going back to 1980’s passive restraints.
What is needed on a compact car with ABS for stability control besides a steering angle sensor and yaw rate sensor? Manufactures might save $200 per car.
Manufactures offer cars below $20,000 and it is a competitive market, there is no shortage of economical transportation. During the last recession people conceded that they didn’t need to replace their cars every 3 to 5 years, they had to continue driving their aging vehicle with that one problematic switch that no longer worked.
I can see the lawsuit now. “You’re telling me you dropped a safety system to save money and then your customer skidded into my client because the safety system wasn’t there after car makers have trained drivers to expect it to be?”
A quick google search turned up the average cost of renting a place in NYC is $2000/month with LA costing $3000/month. Average cost where I live is about $5~700/month, maybe, in BFE(look it up on urban dictionary) Ohio.
I’ve had this discussion with a pastor friend that thinks we should give land back to the Indians. I ask “which Indians”? The ones that were here 200 years ago, or the ones that were here 1000 years ago that got it taken from them, or . . . Presumably, folks were chasing other folks around here for thousands of years before the Vikings came. So if “they” won’t take the land back, maybe try a different tribe of descendants if you really want to get rid of it.
