The problem is with my meager salary. After I pay off the student loans, mortgage, taxes, and general high cost of everything here, I find myself with NOTHING left.
I hear you. I make peanuts compared to (probably) a lot of people on this board, especially since a lot of them seem to be graphic designers, programmers, and the like. My company has a retirement plan with a small match, so I contribute some from each paycheck. It's not much yet, but it's something. I plan to open a Roth IRA in the next few months and start putting some money toward that, too, so all of my retirement savings aren't pre-tax.
My mistake was buying a house at a young age. I can afford the mortgage, taxes, and insurance just fine--it's the repairs that are killing me. I suspect a lot of other Philly rowhouse owners know what I'm talking about! A 100+ year old house is a money pit. Those repairs have cost me a LOT more than I planned for. The student loans are a drag, too, but a necessary evil to get where I am now.
Roth IRAs are brilliant for people like me. Since I expect taxes will be much higher in 40+ years when I retire, I'd rather pay them now and let the interest accumulate tax free.
The post I ended up deleting basically said that I was able to save a significant amount in both retirement savings and a down payment fund despite being pretty young and never having made a good salary until mind-2009. I'm very lucky in having no student loans (thanks, parents!) and no car expenses (thanks, urban living!) but I think fiscal prudence is a huge part of that.
you have to also consider what kind of retirement you expect to enjoy. Most people end up in a lower tax bracket upon retirement than they were while holding down a fulltime job. Especially so at a later stage in one's career, the prime years as it were. In such a case, people may be better off reducing their current tax liability by socking away the max into regular IRA...by the time they retire and start drawing from the IRA, they may be in a lower income bracket-- and aren't some states like PA easy on retirees by not levying state tax on the retirement income?
But if you're in your 20s or early 30s like me, I think a Roth may be a better way to go for several reasons-- one of the big ones being that any beneficiary of your Roth IRA acct will get all of that money, scot-free, no Uncle Sam coming in the way. Imagine starting off your kid or your grandkid with a tidy sum of money that's tax free! I wish I had some hefty inheritance coming my way...! lol
oh, and i'm like you in money dept... no loans (thank you elder sister...i did pay it off to her though, but at least no interest! lol), car note's been paid for for years and while I sometimes feel like buying a new one, I'm going to make this one last as much as possible; at least respectable savings though not separated into "down payment" and other slots.
Perhaps time to jump in and take advantage of that $8k tax credit for home buyers? I have enough to do it, but I just don't want to buy a place in texas...
__________________
"If men loved Pimlico as mothers love children, arbitrarily, because it is THEIRS, Pimlico in a year or two might be fairer than Florence. Some readers will say that this is a mere fantasy. I answer that it is the actual history of mankind. This, as a fact is how cities did grow great...Men did not love Rome because she was great. She was great because they had loved her."
-G.K. Chesterton
Last edited by phillyaggie; 03-10-2010 at 02:06 PM.
for me, rent is the one thing I can control and if I buy, I'm looking to buy along an old standard, 1.5 times income, which frees up money for other things.
1.5x ?!?
Is that really a standard? According to the NER, the median sale price for an existing single-family home for Phila-Camden-Wilm was $215,900 in 2009. That means you'd need an annual income of $144,000 to buy a the median-priced house.
__________________
"Don't forget to send in your ACLU donation, you sad rabid bitch" - The always estimable Dana Lynn
higher education is the next bubble. like homes, it's federally subsidized such that peopel can take outsized loans regardless of the value they derive. in turn, schools can build fancy facilities for sports and "student activities" build little empires, and hire armies of workers. It's all going to come crashing down. people can't afford it, never coule. most of my debt comes from grad school. worth it? maybe, only because the system was set up that way. I could have learned just as much froma handful of teachers without fancy facilities and power points. that said, if saving money is the place to be, the Italian market has some pretty sweet deals.
for me, rent is the one thing I can control and if I buy, I'm looking to buy along an old standard, 1.5 times income, which frees up money for other things. still, the tax on everything (which hasn't gotten worse with rendell) is brutal..and I don't have my grandmother around to buy all the super ripe stuff at the market and make us all something on the cheap.
higher ed...especially the MBA market, I imagine, is oversaturated by now.
Meanwhile, entry-level engineers can't find jobs because most of those are shipped out to Asia and Eastern Europe and South America now. Considering that engineering and sciences aren't so popular with American students as such, it's a bigger problem that you can't find plentiful jobs once you do graduate...
__________________
"If men loved Pimlico as mothers love children, arbitrarily, because it is THEIRS, Pimlico in a year or two might be fairer than Florence. Some readers will say that this is a mere fantasy. I answer that it is the actual history of mankind. This, as a fact is how cities did grow great...Men did not love Rome because she was great. She was great because they had loved her."
Is that really a standard? According to the NER, the median sale price for an existing single-family home for Phila-Camden-Wilm was $215,900 in 2009. That means you'd need an annual income of $144,000 to buy a the median-priced house.
That used to be the common rule of thumb, but keep in mind the median home price in the 1960s and 70s wasn't even $50k. These days, even rental prices are sky high compared to most people's income. If I'd gone by the 1.5x income rule of thumb, I'd be living in a rundown dump in a crime-infested neighborhood somewhere. Yes, my mortgage payment is a stretch (almost 30% of my household net income), but it's still less than I was paying in rent 3 years ago.
I need to start a Roth. I have other accounts with Vanguard and it looks like the minimum initial contribution to open one is $3000. We contribute a good bit each month to our retirement accounts, so I'm not sure when I'll be able to swing opening one of these, but it's definitely one of my short-term goals. Who knows what kind of mess social security will be when I hit retirement age, so I have the mind-set that I would rather go without certain things now and put as much away for retirement as possible than struggle later in life. Of course my husband and I have had solid employment histories that have allowed us to do this...
Spreading risk doesn't eliminate risk or huge outlier events like what was experienced in 2007...just ask the hedge fund and derivative traders who gambled with everybody's pension money until everybody came calling. But I suppose these people were innocent bystanders....this is not to downplay the government's collusion in ripping off people but it's not an either or proposition.
well, pretty much everything got hit in that market...the good, the bad, and the ugly. the only people making money were the ones betting against the market...guys like John Paulson.
i like to follow certain guru investors whose investing philosophies are clear and who invest for the long run. Buffett is just the most famous of them and his scale doesn't allow him to take advantage of smaller companies, but there are others like him...and following some of those gurus can help one navigate the market ups and downs.
of course, if you can't stomach much risk, you simply shouldn't be in the market...because you're liable to sell at precisely the worst moment!
I kinda feel grateful to have "lived thru" this Great Recession and experience the nosedive in my holdings, only to see it all recover soon enough. I just wish I had the guts to buy buy buy when Mr. Market was giving such a nice discount last Feb-March. At least I didn't sell! Hopefully this experience comes in handy during the next downturn...and hopefully I have cash to invest...and let mama dollar and papa dollar have a family real quick!
__________________
"If men loved Pimlico as mothers love children, arbitrarily, because it is THEIRS, Pimlico in a year or two might be fairer than Florence. Some readers will say that this is a mere fantasy. I answer that it is the actual history of mankind. This, as a fact is how cities did grow great...Men did not love Rome because she was great. She was great because they had loved her."
-G.K. Chesterton
Last edited by phillyaggie; 03-10-2010 at 02:24 PM.
higher ed...especially the MBA market, I imagine, is oversaturated by now.
Meanwhile, entry-level engineers can't find jobs because most of those are shipped out to Asia and Eastern Europe and South America now. Considering that engineering and sciences aren't so popular with American students as such, it's a bigger problem that you can't find plentiful jobs once you do graduate...
I thought there was a huge pent up demand for engineers? Microsoft is always talking about how they need more H1-Bs because they can't find enough in the US. And all my engineer friends are employed (while many of my architect friends are not).
__________________
"Don't forget to send in your ACLU donation, you sad rabid bitch" - The always estimable Dana Lynn
Meanwhile, entry-level engineers can't find jobs because most of those are shipped out to Asia and Eastern Europe and South America now. Considering that engineering and sciences aren't so popular with American students as such, it's a bigger problem that you can't find plentiful jobs once you do graduate...
H-1B visa impacts on the domestic worforce must also be taken into account....Microsoft loves em.
Personally, if we want to drive down the costs of healthcare maybe we should increase H-1B visas to an influx of foreign doctors...
__________________
"The cause of imperial collapse invariably is “suicidal statecraft.” ~Toynbee
I kinda feel grateful to have "lived thru" this Great Recession and experience the nosedive in my holdings, only to see it all recover soon enough. I just wish I had the guts to buy buy buy when Mr. Market was giving such a nice discount last Feb-March. At least I didn't sell! Hopefully this experience comes in handy during the next downturn...and hopefully I have cash to invest...and let mama dollar and papa dollar have a family real quick!
You are living through it still....I hope your trigger finger is as quick as the institutional investors you follow who are part of the two-way money and power corridor (e.g. Wash and the financial oligarchs). Not sure that their movements will tip you off quick enough especially since the rules are always changing and they are always throwing curveballs at the little helpers. What they are privy to is not always public knowledge no matter how closely one follows them but yes you can gain insight from their publicized actions but not necessarily their words...
__________________
"The cause of imperial collapse invariably is “suicidal statecraft.” ~Toynbee
Last edited by DrDoom; 03-10-2010 at 03:01 PM.
Reason: sp
I think my generation (20s-30s, I guess I'm a "millennial?") is going to be screwed when we hit retirement. I would say 90% of the people I know in their late 20s-early 30s have *nothing* saved for retirement. A lot of us have serious debt, though--credit cards from college, student loans, mortgages, cars. I'm one of the more financially savvy people I know in this age group, and I'm still just getting by, adding as much as I can to my savings account before something (car, house, pet) needs fixing again.
Meanwhile, the cost of living has gone up, wages are stagnant, and a middle-class income doesn't get you nearly as far as it used to. Our parents' retirement accounts just took a huge hit, and SS is going down the toilet.
I know this is all really obvious, but sometimes it's shocking to stop and think about it.
Is that really a standard? According to the NER, the median sale price for an existing single-family home for Phila-Camden-Wilm was $215,900 in 2009. That means you'd need an annual income of $144,000 to buy a the median-priced house.
Quote:
Originally Posted by phillysw
That used to be the common rule of thumb, but keep in mind the median home price in the 1960s and 70s wasn't even $50k. These days, even rental prices are sky high compared to most people's income. If I'd gone by the 1.5x income rule of thumb, I'd be living in a rundown dump in a crime-infested neighborhood somewhere. Yes, my mortgage payment is a stretch (almost 30% of my household net income), but it's still less than I was paying in rent 3 years ago.
the reason home prices are higher is looser lending standards. as incomes stagnate and debt levels can't be pushed higher, home prices will also stagnate.
thunda-I think you can see the problem then, people with good incomes can't responsibly buy homes anymore.
Quote:
Originally Posted by phillyaggie
higher ed...especially the MBA market, I imagine, is oversaturated by now.
Meanwhile, entry-level engineers can't find jobs because most of those are shipped out to Asia and Eastern Europe and South America now. Considering that engineering and sciences aren't so popular with American students as such, it's a bigger problem that you can't find plentiful jobs once you do graduate...
MBA's are a huge profit center for many universities but overall, education is overpriced. we used to call psych degrees secetrary training. if you weren't going to end up as a psychologist or psychiatrist, you ended up with low salaries in a job that doesn't require education and a ton of debt.
actaully, there was an engineering shortage not so many years ago. the only engineer I do know hasn't had any problems getting work. I think a lot of people aren't well educated in America and don't make good engineers. it's more important here to be trained socially than be good at math. I'm assuming you're not talking about software engineers but things like structural or civil. and why become an engineer when there's more money in law and finance?
__________________
"It has shown me that everything is illuminated in the light of the past"
Jonathan Safran Foer
and why become an engineer when there's more money in law and finance?
And therein lies the rub.....in the last 30 years in particular the finance economy and by extension its non-productive speculatory tendency has disproportionately distorted/crowded out the industrial economy of goods and services (the productive capacities of a nation). Hollowing ourselves out with globalization didn't help either....
Calls to cut people's incomes by 10% across the board in some instances and driving down the price of labor because for every 1 job there are six people looking for work does not help a real economy that is 70% dependent upon consumer spending and credit access to make up for income shortfalls. Until there is structural reform in the manner in which we run the economy we'll be seeing a larger wealth divide and the continued atrophy of the real economy.
__________________
"The cause of imperial collapse invariably is “suicidal statecraft.” ~Toynbee
higher education is the next bubble. like homes, it's federally subsidized such that peopel can take outsized loans regardless of the value they derive. in turn, schools can build fancy facilities for sports and "student activities" build little empires, and hire armies of workers. It's all going to come crashing down. people can't afford it, never coule. most of my debt comes from grad school. worth it? maybe, only because the system was set up that way. I could have learned just as much froma handful of teachers without fancy facilities and power points. that said, if saving money is the place to be, the Italian market has some pretty sweet deals.
for me, rent is the one thing I can control and if I buy, I'm looking to buy along an old standard, 1.5 times income, which frees up money for other things. still, the tax on everything (which hasn't gotten worse with rendell) is brutal..and I don't have my grandmother around to buy all the super ripe stuff at the market and make us all something on the cheap.
I agree 110%. Graduate school was the worst economic decision I've yet to make, and that says something. Here's to hoping it's going to pay off someday!
It's just crazy that I have a job that requires a masters degree and I've yet to clear more than 37,000 dollars... That doesn't really make me see the 40,000 dollar graduate degree in favorable light...
And therein lies the rub.....in the last 30 years in particular the finance economy and by extension is non-productive speculatory tendency has disproportionately distorted the industrial economy of goods and services (the productive capacities of a nation).
Calls to cut people's incomes by 10% across the board in some instances and driving down the price of labor because for every 1 job there are six people looking for work does not help a real economy that is 70% dependent upon consumer spending and credit access to make up for income shortfalls. Until there is structural reform in the manner in which we run the economy we'll be seeing a larger wealth divide and the continued atrophy of the real economy.
ah, but recessions ARE restructurings and when we work to prevent them, usually by spending money (first, savings, then debt) we only exacerbate the misallocations of capital (both human and financial). home prices need to come down, consumer spending on goods need to come down, money needs to be used to pay down debt, invest in productive capacity, etc. but yes, I've been harping for years about how our tax code penalizes production but rewards investment...which makes this a great place to invest your money in companies that produce elsewhere. then there's defense spending and law...
I hear you. I make peanuts compared to (probably) a lot of people on this board, especially since a lot of them seem to be graphic designers, programmers, and the like. My company has a retirement plan with a small match, so I contribute some from each paycheck. It's not much yet, but it's something. I plan to open a Roth IRA in the next few months and start putting some money toward that, too, so all of my retirement savings aren't pre-tax.
My mistake was buying a house at a young age. I can afford the mortgage, taxes, and insurance just fine--it's the repairs that are killing me. I suspect a lot of other Philly rowhouse owners know what I'm talking about! A 100+ year old house is a money pit. Those repairs have cost me a LOT more than I planned for. The student loans are a drag, too, but a necessary evil to get where I am now.
Yeah, luckily I bought a house that's holding up fairly well. (for now) The problem I have is the 389 dollars a month they want for student loans. Considering I only make around 2,000 a month after taxes, it's a hard bill to pay.
Now if they start taxing me more I'm in serious jeopardy of losing my house.
All but 2 of my friends who didn't go to college make more than 5,000 more a year than I do. Now THAT is a kick in the teeth... (no, I am not saying that they deserve less, it's just that I think employers should keep in mind that if they require advanced degrees they have to pay for them)
(no, I am not saying that they deserve less, it's just that I think employers should keep in mind that if they require advanced degrees they have to pay for them)
Not if there are six of them for every available job.....
__________________
"The cause of imperial collapse invariably is “suicidal statecraft.” ~Toynbee
Not if there are six of them for every available job.....
Yup, you're right.
I couldn't honestly recommends any child of mine go to college these days. I wouldn't actively discourage it, I just wouldn't make it the priority my parents made it for me.
If I had to do it all over again I'd be a tradesman.
I think my generation (20s-30s, I guess I'm a "millennial?") is going to be screwed when we hit retirement. I would say 90% of the people I know in their late 20s-early 30s have *nothing* saved for retirement. A lot of us have serious debt, though--credit cards from college, student loans, mortgages, cars. I'm one of the more financially savvy people I know in this age group, and I'm still just getting by, adding as much as I can to my savings account before something (car, house, pet) needs fixing again.
Meanwhile, the cost of living has gone up, wages are stagnant, and a middle-class income doesn't get you nearly as far as it used to. Our parents' retirement accounts just took a huge hit, and SS is going down the toilet.
I know this is all really obvious, but sometimes it's shocking to stop and think about it.
you couldn't be more right. i have read a plethora of studies over the last couple years that has our generation being defined by the "fear of missing out"
for example, its has been said that folks our age dont think about tomorrow, they have no $ in savings, are not concerned about being married or owning a house. we are not committed to anything until the last second because we dont want to miss out on a better offer/opportunity. think about it, everytime you try to get someone our age to RSVP a month in advance, its a big laugh-no one will do it!
social security is the biggest ponzi scheme out there.
just about 1 year ago, i purchased 1000 shares of Ford at $1.93. i knew it had to be a good deal once they said no thanks to uncle sam's $. it was all i could afford at the time, if only i had another couple G's.....
ah, but recessions ARE restructurings and when we work to prevent them, usually by spending money (first, savings, then debt) we only exacerbate the misallocations of capital (both human and financial). home prices need to come down, consumer spending on goods need to come down, money needs to be used to pay down debt, invest in productive capacity, etc. but yes, I've been harping for years about how our tax code penalizes production but rewards investment...which makes this a great place to invest your money in companies that produce elsewhere. then there's defense spending and law...
Our FIRE economy is a "rentier" type economy where people are servicing interest on debt more and more. That is the main distortion and yes the tax code contributes. Recessions are indeed restructurings. The global recession being precluded by QE is the result of global overcapacity. The export/import arrangement and by extension the dollar monopoly has created major global imbalances. US has in the short term the ability to fund it's deficits due to it's reserve currency standing. It's throwing away this advantage by bailing out speculators to the tune of trillions instead of investing for a long term ROI (investing out of a hole versus speculating out of it). The stimulus for the real economy pales in comparison to the massive bailout and subsidies the banking industry is receiving via the Fed Reserve in conjunction with Treasury. It is disproportionate and hence the horrible jobs situation. The bailout offsets the stimulus. This is the problem and again requires some massive rethink. China and other countries are allowing us the time to restructure but we're pissing it away and born again deficit hawks who want to impose austerity measures during this reprieve will most certainly contribute to a second leg down if they have their way. I suspect they will as self-imposed austerity measures are picking up steam....
