posted on February 9, 2004 08:29:56 PM new
Yesterday, my friend Jane told me some close friends of hers might have to sell their house because they can't afford the upkeep. Tonite, a couple of my neighbours stopped by and told me they've got their house up for sale. Same thing - they just can't afford the taxes and the cost of the upkeep.
Do you guys find it a struggle, trying to make ends meet every month?
posted on February 9, 2004 08:47:43 PM new
Krafty, I sure do. But then again, we did not anticipate my not working with the second income that we had grown accustomed to having.
Have you seen that commercial where the guy is on his riding lawn mower, then shown in his back yard doing a barbecue,and very gentily says, "I own all this" and I am barely making my minimum payments - Somebody help me."
I think many are in great denial of living beyond their means. But we keep riding round on our lawn mowers, not a care in the world something is desperately wrong.
posted on February 10, 2004 06:24:03 AM new
Foreclosures are at a record high here. A LOT of houses are at tax sale.
And the rules for writting loans are such that if someone does not have a huge equity and is unemployed or under employed they are not going toi get one of those low rate loans that would help them make ends meet.
People will often wait too long or refuse to file bankrupsy because of the stigma.
Yet some have several credit cards and when they become unemployed the card companies jack up the interest rate even if no payments have been late because they are not as good a risk. They often precipitate the crisis themselves by raising the payments when there is no slack to take up. Some genius from Harvard Business School must have thought of that tactic.
posted on February 10, 2004 07:38:02 AM new
We are also in a world economy that will require a huge adjustment for American wage earners.
The bottom line is that US wages must come down and they are already for many people.
But our "leaders" are trying to slow boil this frog. Instead of just lowering your wages they: Lay off and move manufacturing and you take a lower paying job doing something else; and/or they decrease the amount they will pay for your medicaL insurance; and/or they get rid of defined benefit retirement and give you a 401K that will probably be tanked when everyone starts to retire; and/or they now pay less matching finds towards your 401K.
Thge bottom line is that the American worker can not continue to make $45 an hour (inclusive of all wages and benefits) when his/her counter-part is making 60 cents a day, and there are literally billions of person available to work for 60 cents a day and glad to get it.
The world will have two classes in the near future: the incredibly rich and powerful and the poor living day to day, some with jobs and some without.
The trick that American politicians must do to keep their jobs is to slow boil the frog so he doesn't notice the heat.
I just read yeaterday that Bush's commission on the Postal Service wants to lower medical insurance and retirement benefits for Postal employees to match that of the private sector.
Imagine that, the private sector now has lower benefits that the Postal service.
People had better wake up. Once your jobs and living wages are gone you won't have time to be politically active for change, you'll be too busy working so you can eat each day.
posted on February 10, 2004 07:40:22 AM new
I think a lot of that is due to the low interest rates. People are buying houses that shouldn't be buying them at all. People who can buy houses are buying more than they can afford.
If you can afford a $100,000 house payment, and the realtor shows you how to get a $200,000 for only a "little" more each month, that's going to entice a lot of people.
But then you have no savings and when a bad period comes and a job is lost, your financial life is ruined.
It's all a matter of living within your means AND knowing you limits.
Too many people are buying big houses, and not enough are saving money for retirement or a rainy day.
-------------------
Replay Media
Games of all kinds!
posted on February 10, 2004 07:53:55 AM new
It has little to do with living within one's means. It has a lot to do with the world economy lowering our standard of living.
Lower interest rates allowing someone to buy a better house is not causing the problem, losing jobs is.
It doesn't make a different how close you watch your pennies, if you lose you're income, you're screwed. The only difference is being evicted from a $200,000 house instead of a $100,000 house.
What's causing all this is high wage jobs becoming low wage jobs or no jobs at all.
posted on February 10, 2004 08:23:23 AM new
And a very small percentage of the work force ever had $45 an hour jobs even with benefits factored in.
More common around here (Detroit area) is the $15 and hour job with about $5 an hour of benefits. The auto workers themselves might come close to that $45/hr but for every auto worker there were a couple dozen other workers making parts for the cars at small supply companies. All the seat assemblies and dash assemblies and brackets and plastic parts and nuts and bolts. And all the support services that keep the big factories running. The people in the community who sell and provide services to these higher paying people all make less - from the guy who sells the auto worker a snowmobile to the guy who cuts his grass.
Now those people are being laid off and if there is a job around here for them at all it is at $7 or $8 an hour with little or no bennies.
And I will tell you straight out you can't keep a free standing house in a safe part of town and raise a family with a car that is not a junker for that sort of wage.
[ edited by gravid on Feb 10, 2004 08:24 AM ]
posted on February 10, 2004 09:33:30 AM new
::If you can afford a $100,000 house payment, and the realtor shows you how to get a $200,000 for only a "little" more each month, that's going to entice a lot of people.::
Do they still build 100k homes? I have not seen anything in California for under 200K in the past few years. Even the condos up the street are staring at 150K
~~~ • ~~~ • ~~~ • ~~~ • ~~~
If it's really "common" sense, why do so few people actually have it?
posted on February 10, 2004 09:56:04 AM newAnd a very small percentage of the work force ever had $45 an hour jobs even with benefits factored in.
It is very easy for a $18 an hour job to be a $45 job when factoring in ALL compensation, including all SS taxes paid by the employer as well as worker's comp premiums paid by the employer, health insurance premiums, defined benefit retirements plans, etc., etc..
$18 an hour would be a skilled labor job such as a machinist or electrician. But even these jobs are disappearing.
A very large percentage would have these high paying jobs if they were not being sent over seas.
Even the IT jobs that were supposed to replace these lost high paying skilled labor jobs are now being farmed out.
The IT jobs were total package $45 and more.
We are exporting high paying jobs and importing poverty. That is exactly what this new world economy is supposed to do.
edited to add-- those low paying service jobs you mention used to have benefits.
My first full time job a little over 25 years ago paid $5.77 an hour. That same job now pays minimum wage. The person doing that job is actually making less than I did doing the same work over 25 years ago.
There is no escaping the effect of competing against 60 cents an hour wages.
There is nothing but poverty to import from these third world countries for working people.
posted on February 10, 2004 11:31:57 AM new
Fenix, that's a good point - where are all the 100K houses? In my area alone, there are 5 new shopping MALLS going in (mostly American stores) and new subdivisions are springing up everywhere. The houses have about 2 feet between them (very small lots) and they're massive - 3 and 4 car garages, no less than 5 bedrooms, 4-5 baths - all starting at about $400K. Not only could I never afford to live in one of these places, I doubt I'd even be able to afford to heat one of those houses! Sure, there are condos, but they run around $300K for a nice one and you have to pay condo fees upwards of $600.00 a month plus.
About 20 years ago, everyone was talking about how the rich will get richer and the poor poorer and middle class will be history. I think that's happening now. Working hard to have a wonderful retirement is a thing of the past.
posted on February 10, 2004 12:09:59 PM new
Reamond, I think it has alot to do with living beyond one's means.
I saw an interesting show about this, and one of the things that struck me as so very true was, how we go out and buy food. This woman, and I forget her name, made the statement we wind up with 3-4 cereal boxes half full and then go out and buy another box. That we dont use what we have before we are buying more and wind up throwing the older stuff away. That hit me as so true. I have cans of stuff I bought for one reason or another still sitting in my cupboard. Or things in the freezer I wind up throwing out from freezer burn after being in there too long!
Wonder how much I'd save if I didnt do that. And I cant be the only one who does it. lol
posted on February 10, 2004 12:27:43 PM new
Foreclosure rate is likely to explode nation wide. Scores of people when purchasing a home opt to disregard the sound princple, that 2-1/2 times one's annual income, is the formula that one should use when determining the amount one can safely spend in purchasing a home. Justify this "overspending" as investing, I have known several couples that had substantial amounts of money in the bank, ever growing disastisfied with the lack luster return on said monies. Have rcently invested in a more expensive home attempting to hedge against the shortcomings of the low interest rate. Laboring under the failed logic that home prices will continue to rise, don't bet on it! This is setting-up to be, yet another fleecing of the Middle Class, much like the fleecing the Middle Class took in the stockmarket.
posted on February 10, 2004 12:43:01 PM new
I totally agree with you, Neroter... Reamond and Gravid are right on. Society tells us the fastest way to happiness is to go out and spend our hard earned money on new house, cars, home theatres, lawn & grounds maintenance, etc. Shouldn't we all be living in a land of ultimate happiness by now? Especially movie stars - you'd think they'd all be the happiest people on earth with their fancy lifestyles and gold chairs.
posted on February 10, 2004 12:44:19 PM new
The solution is a simple tactic. It's called living within your means. If you just want it, you don't need it. If you need it, wait for it to go on sale.
"If you believe you can tell me what to think, I believe I can tell you where to go. Not all of us are sheep....."
posted on February 10, 2004 12:51:10 PM new
There is no "rule of thumb" when you lose your job. It doesn't make one wit of difference if your home is 2 1/2 3 or 5 times your income, in this economy if that income ceases, you're screwed.
The only rule of thumb operating now is if you lose your job and you are fortunate enough to find another one, it pays less and has less benefits.
If you go from $5000 a month income or $1500 a month income to zero, it makes no difference if you're renting an apartment or in a $250,000 house. Either way, if you can't replace that income quickly, you're going to be evicted. If I had 6 months "reserve" funds I would hide it in a shoebox and not pay anyone anything until I found another job, then use the money to catch up.
The biggest mistake people make is trying to keep up when it is somewhat certain they can not replace the income. Their creditors suck them dry then spit them out. Hang onto whatever cash you have and sell all the assets you can for cash. That "nest egg" may be your moving money to get to another region/area where you can find a job and make a deposit on an apartment or cash for a car.
The people I have read about in the record setting bankruptacies filings and foreclosures all lost their jobs and couldn't find anything that paid as much.
posted on February 10, 2004 01:06:50 PM new
Reamond, that's a disease in itself - "The people I have read about in the record setting bankruptacies filings and foreclosures all lost their jobs and couldn't find anything that paid as much." - people that won't work for any less than what they're used to. That way of thinking is rampant here.
posted on February 10, 2004 01:47:15 PM new
Have any of you ever sat in on bankruptcy hearings? They're most illuminating. Yes, they are always peppered with a few who tried desperately to maintain their lives through mismanagement of their credit lines when they lost their jobs or wages/hours were cut back. I looked on these people as those who'd otherwise always paid their bills on time and hadn't known (how could they? ) that their jobs would disappear. In other words, honest hard-working people who'd sunk through unforeseen economic changes. These folks were charging-off debts in the $20,000 range.
There was a far greater number of people, however, who were there for their second or third charge-off. These were the ones who lived beyond any visible means to begin with, who racked up hundreds of thousands of dollars of debt and knew the system well enough to understand that they'd never be held responsible for any of it. The cynic in me admired such chicanery; the taxpayer in me wondered how it could be possible for people with a history of (one) bankruptcy to be allowed yet another amounting to a small fortune. Was there no oversight at all?
Apparently not. In fact, what shocked me and may merely surprise you was that, contrary to the stated warnings about how ruined one's credit will be after bankruptcy, the credit card companies actually court those who've just gone through Chapter 7 proceedings, knowing that they can't file again before another seven years have passed. So, the wiseacres spend their credit extravaganzas not only buying luxury homes/cars/boats, but devote a prudent portion to "charged" cash, which is hoarded as a ready asset when the credit card companies come calling offering even more credit if they'll just pay on time.
(Why was I observing bankruptcy hearings? I enjoy courtrooms of all kinds. I was once made to leave "night court" -- the judge threw me out -- when I couldn't stop laughing over the testimony of the drunk before him, who was insisting that he and his brother could "whip" the judge any day of the week. I try to attend several trials a year. )
posted on February 10, 2004 02:03:00 PM new
Well what is the insentive to rush to take a job paying much less if it isn't going to save your house or car?
There is plenty of time to take a low paying job just to eat after you have exhausted every chance to hang on to your life as you are used to it.
I used to help a guy part time who refurbished junk houses for a living and employed a half dozen guys. Now there are so many repossesions on the market he couldn't market his fixed up homes and took a 9 to 5 and laid all his guys off.
What I'm trying to say there is even the bottom end of the job market is not safe anymore.
posted on February 10, 2004 02:07:06 PM new
yes,you can have a house for 100k.
i am outside houston and last year the cheapest house was 115k(2 car garage,one level,3 bedroom,2 bath with dining room and fireplace on 50x120 lot).
this year they are targeting first time homebuyers with a house with no dining room,smaller lot,and brick front only-100k base price(3 bedrooms,2 baths and 2 car garage),still not a bad deal,a family with small children can live happily in such a house.
builders use subcontractors who hire mexican and eastern european to build the house.
we have multi families living in a 2 storey 5 bedroom house (200k) ,say aunt,uncle,inlaw etc,nice nifty way to share expenses and free babysitting too.
the catch is that if you work in the city of houston,the location is not for you.
so far i am not aware of many defaults or foreclosures,but with the builder planning to build 700 more houses,it is hard to sell your house if you need to sell it.
the builder also owns mortgage company,so if a buyer cant qualify for a bank mortgage,the builder will offer one at a higher rate.
-sig file -------the lobster in the boiling pot of water who tries to prevent the others from climbing out.
posted on February 10, 2004 02:08:55 PM new
Right again, Gravid. And it's the mindset of thinking your income will last forever with lots of raises in between. No wonder our children are so material oriented.
posted on February 10, 2004 02:17:09 PM new
I meant to add that that was an interesting post, Pat. It's like everyone has to work the system for financial gain because they can.
posted on February 10, 2004 02:22:54 PM new
forget to add-
state of texas gives 7k to first time homebuyers who qualify (income )and buy a house under 2 years old,all the buyer needs to do is to take a course.
that was a few years ago,dunno if it has changed.
-sig file -------the lobster in the boiling pot of water who tries to prevent the others from climbing out.
posted on February 10, 2004 02:23:02 PM new
Many that have fallen prey to foreclosure, have done so by their own device. Yes, it is a given that a certain percentage who lose their employment, some of that percentage will never have the same level of earnings again, to accommodate their previous lifestyle.
Here is something to think about!
Henry Ford doubled the wage of the people working the lines in Ford assembly plants.
And in effect, went on to say, that he could have increased it substantial more and could still yield a reasonable profit, but felt that they wouldn't bother to come to work regularly, if they were paid such a outlandish wage.
posted on February 10, 2004 02:25:54 PM new
"Well what is the insentive to rush to take a job paying much less if it isn't going to save your house or car? "
Indeed, Gravid, what's the point of sinking slowly?
Our local Home Depot has, in the last couple of years, become staffed with highly knowledgeable "sales associates" ...
The man now running the tool department (in a special caged-off area with its own cash register) used to own/operate a tool store of his own in my town. (I so hated the crowds and fluck-ups at Home Depot that I gladly paid a few bucks more at his store when I needed a tool.)
"What happened? " I asked him one day.
"I couldn't compete with this place," he replied. "I couldn't, as a local single-outlet dealer, buy the quantities necessary to qualify for wholesale discounts on the same scale that Home Depot gets them. So, here I am; I've sold my business and now I'm running around unlocking display cases of router bits and nailguns."
The guy running the locksmith area at Home Depot (really, he just cuts keys and/or re-keys cheap locks) used to have his own locksmith business.
The guy at the rear of the store, where one goes to have plywood panels and/or lumber cut-to-size, used to work at a local lumberyard that went belly-up shortly after Home Depot opened.
None of these three men are making anywhere near what they made as small-business owners or employees, and while it's 'nice' for me to be able to go to Home Depot and ask for an 80-tooth 10" in-line sawblade and not have the guy say, "Huh? " it disturbs me that these enterprising people have become victims of the New World Order...
posted on February 10, 2004 02:28:27 PM new
same with walmart,the local competitors work for walmart and make 100k on their walmart stock.
-sig file -------the lobster in the boiling pot of water who tries to prevent the others from climbing out.
posted on February 10, 2004 02:37:53 PM new
That is ploy corporation's have used to eliminate jobs and increase profits, under the guise of "convenience".
I the past you went to lumber yard and they loaded the lumber, now you go the HQ, HD or Lowe's you haul it out.
posted on February 10, 2004 02:46:03 PM new
Nobody wants to talk about it but there is a substantial underground economy also.
A lot of the houses we sold when I was in real estate just a few years ago were what you call no doc.
As long as the buyer put a sizable down payment - usually 30% of the price they did not have to show they had enough income or were even gainfully employed in any manner. The mortgage writer figured that at 30% + down even if they never paid a single payment they could take the house back and the down payment would cover the costs to repo and market it.
We did have one agent in our office get a cal at closing that the couple were running late but not to leave - they would be there. They came in and instead of a check they had an attache case full of money and counted out the closing fees.
About 6 weeks later we found out they had robbed a bank on the way to closing.
posted on February 10, 2004 03:30:49 PM new
I'm one of those bankruptcies. I'm in the middle of it right now. I had a great job paying $15 an hour with benefits. I got laid off (coincidentally, I lost that job in 2000) and it took two months to find one paying $8.00 an hour (with no benefits). There was no way I could continue paying on my credit cards. I did it for as long as I could. There was a time that if it weren't for one of my cards, we would not have eaten. When I had to make a choice between a roof over our heads or a credit card payment, I knew it was time.
Here I am a CPS (Certified Professional Secretary) with 28 years experience, typing at 80-100 wpm making $8.00 an hour as an office manager for a non-profit. At my age the competition is the killer. Who can compete with the 20-somethings? Oh sure, they can't ask you your age. Give me a break. They ask you what year you graduated on your application. They ask for your job history. It doesn't take a rocket scientist to figure out someone's age given all that information. Once they see your age and all the experience, they see that you may cost them more than the 20-something year old that they can train to do things their way. The term I believe is "over-qualified". I get that a lot. At any rate, I like my current job.
Now even the non-profit I'm working for is slowing going under. It's been a month since I've been paid. My boyfriend who is a carpenter hasn't worked in a month because no one has any money to make home improvements right now. It stinks. Still, we survive. I look at it this way. . .heaven forbid should we ever have another depression, but if we did I think I would survive okay. No jumping out of windows here!
So far, eBay has helped to keep us afloat. I hope that trend continues. It's happening all over the country. I've seen many of my friends get laid off and I've seen some lose their homes. It's become next to impossible to "save for a rainy day."
