patrick.net

drew_eckhardt says

Community colleges let you take classes for $100/credit hour ($12K for a four year degree).

Community College is like a disco with books. Give me five dollar; get my learn' on.

Doing the Math
Income:
2 earners full time $10/hour make @ $40,000/year (median BA household income is $57k) Lets say $36,000 after taxes to make the math easy. That makes $3,000/month.
Expenses:
Rent $1400 (average 2 br rent in Alameda & CoCo County $1402)
Food $500 (Eatin' cheap)
Power $100 (A little high for a 2br)
Phones $100 (Home and Cells estimate could be low)
Gas $160 (30 mile round trip to work @ 15mpg $4/Gal)
Maintenance $300 (Car & personal)
Med & Hygiene $200 (Work covers insurance)
Entertainment $240 (all thats left!)
Kids $0 (can't afford the time or money)
Total = $3000
Income - Expenses = ZERO. Not counting all of the expenses I left out.

I just wanted to finesse the numbers a bit, in a lower income area than california, someone could live quite well on 40k in pittsburgh. The average here is 47k for 2 people.
Rent here is $500 a month
Food is more $750 a month
Power is between gas and elec,ie winter vs air conditioning.
$300 a month
Phones are $120 a month
Cable is $120 a month
Car payment $200 a month
Gas $100 a month
Maintence $100 a month
Meds and Hygene $200 a month no insurance coverage usually
entertainment is renting a movie on comcast say 4 a month
35 a month.
That's $2435 a month or 29,100 a year 47k-29.1k leaves 18k for living expenses which if you are careful should be enough.
I forgot car insurance but I don't know what that would be.

If you have a roommate in a 2 bed apartment then you could make it on much less.
Rent $225
Food $750
Power $150
Phones $120
Cable $60
Car Payment $200,
Gas $100,
Maintence $100,
Meds and Hygene $200,
Entertainment $20.

With a roommate this comes to 420 a month bare bones. That's 5040 a year for living expenses. This leaves tons of room for real life stuff that comes by. If these expenses are 1/4 of your take home pay 20,160, you would be doing quite well. This is how you survive an economic downturn.

I would suggest a few books for your grandson...The complete tightwad gazette and america's cheapest family by the economidies. They have a new book out too. These are 2 of my favorite books, but there are many more that address budgeting. After doing the math for the apartments up the street, I'm really considering ditching the house and moving back up there. We lived there when we were newlyweds. Would help us save for retirement.

Expenses:
Rent $1400 (average 2 br rent in Alameda & CoCo County $1402)
Well, assuming you have a pair w/o children, they do not need a 2br appt. 1br is good enough.
If $1400 is an average, one may find something cheaper than average.
Something like $1100 should be sufficient (which is of course insanely high for a 1br appartment)

Food $500 (Eatin' cheap) -- nonsense. we have a family of four plus lots of guests and relatives.
In Pasadena area our shopping pattern is about $100 a week at a supermarket (Superking) + about $50 a week at Trader Joe's + $10 occasionally in other places.
That's $160 a week inncluding beer wine and spirits. I could easily cut it almost in half and for 2 people $50 a week should be more than sufficient.
Let's say $250/mo. Forget about eating out, though.

Power $100 (A little high for a 2br) -- Should be more like $70 for a 1br.

Phones $100 (Home and Cells estimate could be low)

Gas $160 (30 mile round trip to work @ 15mpg $4/Gal)
Maintenance $300 (Car & personal)
So, you assume $460/mo for transportation. Try to find a job with public transportation access, like Bart + bicicle + one used car for emergencies and recreation. That would cut it to half the expense. Let's say $250/mo.

Med & Hygiene $200 (Work covers insurance). That may be not sufficient with all copayments etc. $300 is more realistic.
Entertainment $240 (all thats left!) -- Way too much for such income. Cut it to $50/mo.

Kids $0 (can't afford the time or money)
Total = $1100+$250+$70+$100+$250+$300+$50=$2110
All of the expenses you left out = $890

Squatting in East CoCo says

Rent $1400 (average 2 br rent in Alameda & CoCo County $1402)

How can a low income family afford rent?

lol, what makes you think that a houshold bringing home $40K/yr gross is renting property at the Alameda/CCC average of $1402?

BayArea says

Squatting in East CoCo says

Rent $1400 (average 2 br rent in Alameda & CoCo County $1402)

How can a low income family afford rent?

lol, what makes you think that a houshold bringing home $40K/yr gross is renting property at the Alameda/CCC average of $1402?

With household income like that, it may be best to move to stockton/lathrop region.

drew_eckhardt says

It sucks that people need to live in a world broken by bankers and their friends, although there are things we can do which make that less unpleasant.
In Spain, personal finance education looks a little like this:
http://www.youtube.com/embed/Wv5dh8v7mDs&feature=plcp

drew_eckhardt says

I pay $110/year for my adult son's PPO insurance. Without pre-existing conditions that preclude getting an individual policy you really want to do that.

Drew, I'm looking for insurance for me and my family through my business. Can you please share this info with me/us so that I may follow up on it? $110 sounds unbelievably 'sane'. What is the deductible attached to this?. Is this through your company or employment?

Thanks,

Jeff

saxyjeff says

I pay $110/year for my adult son's PPO insurance. Without pre-existing conditions that preclude getting an individual policy you really want to do that.

Drew, I'm looking for insurance for me and my family through my business. Can you please share this info with me/us so that I may follow up on it? $110 sounds unbelievably 'sane'. What is the deductible attached to this?.

Anthem Blue Cross / Blue Shield in Colorado

$5000 deductible, $8500 out-of-pocket maximum, 30% co-insurance for in-patient stays between the two but 100% for out-patient.

It's catastrophic coverage. $8500 in medical bills would be annoying but isn't going to deplete my savings enough that job loss would be a problem or delay retirement. Five, six, and more figure bills would be a different story. With less savings it'd make sense to add a separate accident plan.

In this case a few hundred dollars here and there (we do get the insurance company's negotiated discount which can be substantial - I had some blood work done once where the list price was $300 and they'd negotiated $12 and change) or even a few thousand isn't too interesting compared to the premium increase for a convenient full-coverage plan.

In many cases those expenses could be covered with pre-tax money via an HSA; although I don't think that works in my case (it's not a family plan where I'm the policy holder)..

Is this through your company or employment?

Nope. Private.

swebb says

They supplied the crack, but they didn't make anyone smoke it. There has to be some responsibility/accountability with the borrower.

The best line I have read here in years.

Those people should not be here. They should relocate.

You left out they get better jobs, work 2 jobs, get raises. $10/hr is pretty low - these are entry level wages for that area. One or both of them should if they are at all industrious eventually move up the pay ladder, or be able to find a job that pays more.

It is a bad situation out there, and yes the banks/financial institutions have not operated in a ethical manner, shame on them, and I hope stronger much stronger regulations will come in place as to who can buy a house or not.

But, the coin has two sides. I did not read through all the posts and do not know what has been said already, but I have a take on this too. If we are to problem solve, we must look at issues from various perspectives.

Where is the responsibility of the buyer? If I am only making $40K /year, should I buy a home for $800K? Just as an example, of course a number of other factors play in.

As for myself, I would not mind at all living in my own home, but what held me back is the PRICE. I did a very simple unscientific calculation just for fun when I lived in a suite in a home. Landlady figured her house would sell for $700K, I was renting 2rooms/bathroom, share kitchen for $600 all included.
I figured if I was to buy this home and maybe pay $800 in mortgage, I would be paying till I am 160 years old or somethin like that. Obviously NOT REALISTIC AT ALL. That not counting in interest, taxes, maintainance, utils ETC.

This is more or less grade 3 math.

So, I have one thing to say: Hello???

I know, hindsight right? But still it does not add up.

I think one problem is people have become numb to credit, entitlement is rampant, keeping up with the jonese's regardless how idiotic it is.
I know people have been played by the media, banks. But come on!!! Would you go and buy a chocolate bar if it was $100 and it would take you 5 years to pay it off? A house is much more and far more complex purchase. Does it not make sense to really, really think this through before committing to the dotted line? If YOU dont look after your money, WHO WILL??

People have been saying, let the consumer speak. If a price is too high, people wont buy, if a product is shoddy, people wont buy. I guess the market is correcting itself by simple fundamentals, it has just been too high, and they could not afford it. Very simple.

Do the banks need to include an IQ/financial knowledge test before qualifying a buyer for a mortgage? If so, I could see many shaping up in their financial behaviour. This might be a good thing for the nation.

Ok, start your machine guns...

SIMPLE: don't have kids.

you don't need help being poor.

AdamCarollaFan says

SIMPLE: don't have kids.

you don't need help being poor.

Amen! The problem isn't how to help them, the problem is that they had too many Fing kids when they can't afford them. Until we get that through our heads, we'll continue to have poor who are looking for handouts to keep their lives in tact and keep pumping out children they can't afford. Cut off the umbilical cord and watch a significant change in behavior.

The Professor says

The Professor says

My real question is, given the underlying financial situation, how high can rents go before thay can't go any higher?

Anyone?

It's driven by supply and demand. Lower income people will leave the Bay Area and go to lower COL areas. If enough of them leave and the Area can't find enough low income workers, then wages will increase to the point that will bring those workers back.

The Professor says

Kids $0 (can't afford the time or money)

If you focus on that line item, you'll have figured it out.

No, it's not sustainable, in that, it can't replicate itself.

As designed.

Same with high college tuition and the middle class.

The only answer is to not replicate.

Again, as designed.

bgamall4 says

debyne says

The Professor says

The Professor says

My real question is, given the underlying financial situation, how high can rents go before thay can't go any higher?

Anyone?

It's driven by supply and demand. Lower income people will leave the Bay Area and go to lower COL areas. If enough of them leave and the Area can't find enough low income workers, then wages will increase to the point that will bring those workers back.

No, too many multigenerational people living and willing to work for cheap. It is not working for the worker right now as people have to retrench.

Well, then that's their choice. Why try doing something about it? It's in their hands.

bgamall4 says

debyne says

Well, then that's their choice. Why try doing something about it? It's in their hands.

I actually advocate multigenerational living. The banksters hate lack of household formation, and they almost think the young are stealing their profits by doing so!

I don't disagree with you...I think multigenerational living works on many levels. However, there is that trade-off of having to move and it sucks when it has to happen. I've had to pick up and move my family a couple of times and I hated it, but it was what was best for us in the long run and I couldn't be stubborn about it.