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Mike,

If 200K is pre-tax, then the take-home post-tax post 401K net income is roughly 120K. With 2 kids, private school expenses are 40K per year. Which 30% of the actual income. Very rough calculations. Add mortgage of 40K (post tax benifits) to it. That is 80K of 120K. A couple will be financially stretched at that level.

Renting at 25K (vs the 80K above) in a good school district is hence a no-brainer.

Well, it should never have come to this. For our kids sake.

Previous comment for To BA Or Not To BA .

LILLL,

When I went to school, half of us kids went to the same private schools. Hung out together and had lots of activities together. We didn't bring home the swear words as our first language, and disrespect that the children from public school bring home today. I don't mind hard language from time to time, in order to get a point across, but not loosely out of a child's mouth, who learns no respect.

The western analogues are “intellectuals” [...]. They disdain money, usually because they don’t have very much, and instead they rate themselves based upon publications, degrees, notoriety and reputation among one’s peers, etc. They too miss the big picture.

Those tend to be pseudo intellectuals. The real ones do not care too much about publications and degrees. They do, however, care about their reputations amongst a very select group of people.

You also have to understand that modern academia is a business, not an intellectual haven. Professors are generally speaking better compensated than most middle-class folks and do not perform supervised work. Many IBs who pull in a million bucks a year are supervised in some way. The professors enjoy certain prestige, which means a lot to a lot of people.

Not that I want to be one of them. Having spent a good chunk of my youth there, I have great disdain for the academia.

You can always send your kids away to a different country with higher education standards. Australia seems to be a good place. They speak English.

Even as the merchant class arose and gained power and affluence they were still looked down upon by the nobility and the civil service.

The merchant class has always been looked down upon in almost every society. The only notable exceptions are US of A, England 1700-1900, Venice in its heydays, and possibly the Athenian Empire. But, these are notable exceptions. In US of A and ancien Venice, the merchant class rule(d). In England and Athenian Empire, the merchant class shared power with the hereditary nobles. Correct me if I am wrong.

The original meaning of "middle class" refers to the merchant class and the factory owners. In short, business owners. Professionals such as lawyers were not considered middle class, because they were for hire.

They disdain money, usually because they don’t have very much [...]

Partially true.

Two kinds of people disdain money: Those who don't have much and have convinced themselves that they can live happily without much money and those who were born with too much and never have never felt the need for money.

Peter P Says:

> I still do not understand good school districts.
> If they really care so much about the future of
> their kids, perhaps they should perform cesarean
> deliveries when planets align instead.

Then Governor Conan Says:

> Real education is outside schooling. Whoever
> places undue emphasis on schooling is a drone,
> a machine, a slave to the syste.

This is the reason that you send kids to good schools. In a good school kids learn that you need to go to a good college from other students and their parents.

In a bad school kids learn that you need to do a drive by if someone “diss you” (for a less dramatic example a friend that moved to the mountains ended up with a pregnant 16 year old daughter since that is normal at her school (it is not normal in SF at Convent of the Sacred Heart).

Someone a while back said “who you pick for your parents will determine your success in life”… The reason for this is that “Where the parents send their kids to school will determine their success in life”… In good schools most kids go to college, and in bad schools most kids drop out.

Astrid,

That is a great idea. Thank you!

Ironically, the reason wny I don't want my kids to be the only non-whites in school is because I am afraid that they will be indoctrinated with the ideology of diversity.

In a CA good public school, one that isn't attended by too many Hispanics, I am pretty certain that my kids would immediately be labeled as "the Hispanics." On the Day of the Dead, Cinco de Mayo, etc., they'd be used as the token representatives of this minority group. That's because here, in the land of liberalism, everyone must be labeled as a member of a racial or ethnic group.

I do NOT want this. I do NOT want their heritage to be an issue. I do NOT want my kids to think of themselves as "Hispanics." I want them to think of themselves as people. I do NOT want them patronized or treated as "special and wonderful" (in a transparently fake way) because of the color of their skin or their heritage. I want them to be treated like everyone else.

This is a really big deal to me. I don't even let my kids watch Sesame Street because I am worried that there might be a liberal subtext in the shows. PBS seems to be pretty good about this stuff, and I am inclined to trust them, but I don't have time to monitor every show, so I don't let them watch it at all.

Ironically, in the provincial Midwest, this would not be an issue. In the lower-middle-class, lilly-white exurb where I grew up, minority kids really stuck out becuase there were so few of them. But no one made an issue of their race or ethnicity. There were so few minorities that people never really developed a seperate mental classification for them; everyone was treated as white. For example, there were exactly three black people in my high school graduating class of 400. Our Homecoming King was black. His election wasn't hailed as a great leap forward in tolerance and diversity. I remember that I didn't even think about it in those terms until my mom saw his picture in the paper and mentioned that he was black. It didn't even occur to any of the kids that we had just elected a black guy. No one gave Steve's race any thought, he won becuase everyone liked him. He was just a good guy.

Things have undoubtedly changed since I was a kid. I'm sure that the teachers are more liberal today and would make an attempt to "celebrate diversity." But I also know that if I quietly had a word with the teacher, they'd understand where I was coming from and would refrain from doing so, at least where my kids are concerned.

Here I am not so sure. I am pretty sure that if my kids were the only Hispanics in, say, South Pasadena, the teachers would immediately start in with the diversity stuff. I am not sure that I could dissuade them from doing so.

If there are enough Hispanics in the class, it won't be an issue. For example, here in Alhambra the schools are probably 2/3 Asian and 1/3 Hispanic. I do not plan on sending my kids to school here, becuase the schools are not that great, but if I did, the idea of indoctrination with the ideology of diversity would not be a concern. There seems to be a different dynanmic when everyone is a minority. And while there is some racial tension in the schools here -- the fact that the Asians make up the overwhelming majority of "A" students, while Hispanics make up the overwhelming majority of "C" students is obvious to everyone but the school administrators -- it's pretty minor. And the Hispanic "A" students seem to be readily acceped by the Asians. So if the Alhambra schools were good, I would have no problem sending my kids to them.

Here in CA, most of the good public schools have very few Hispanic students. The faculty is, however, quite liberal. I fear that if I send my kids to public school here, they'll be singled out and patronized. The private schools, on the other hand, have basically no Hispanics. I strongly suspect that for this reason, my kids' ethnicity will be a non-issue. And I am certain that if I ask the teachers not to make an issue of it, they will honor my request.

Also, I think the socialization kids get in private school is beneficial. While I don't want them to turn into little preppie shits, and will send them to public school in a heartbeat if this starts to happen, I do want them to know which fork to use, etc.

How many top-notch hospitals are there in CA? Only three - UCLA, UCSF, and maybe Stanford.

What makes you think that top-notch hospitals are necessarily teaching hospitals? Do you really want to be treated by a student?

I know this tangent is from last night, but aside from my personal bias for Stanford, I MUST correct some complete misstatements by Peter, OO and others.

First, every single hospital any of you would consider either "world class" or top-notch in this country is a teaching hospital, no exceptions. The way the US medical system operates relies on interns, residents and fellows to help run these hospitals. Any physician with any amount of national prestige and recognition (or aspirations thereof) wants to work at these hospitals. In addition to UCLA, UCSF and Stanford (all three are by all objective measures in the same "league" of national prominence and excellence), think of Johns Hopkins, Massachusetts General, Brigham and Women's Cleveland Clinic, Mayo Clinic, Texas Heart Institute, etc. Every single one of them will have interns and residents. Face it, at every single one of these places, yes, you will have trainees involved in your care. If you want top-notch care and innovation, these are the places to go. If you want a private practitioner GOME who kisses up to you when he/she visits your hospital room while practicing medicine that's 10-20 years old because he hasn't learned anything new since residency, go to a private hospital. And worse yet, if you want 2 minutes a day with your doctor, go to a Kaiser hospital. (BTW, Kaiser hospitals also have their own interns and residents, too. So do "private hospitals" like Cedars Sinai).

Of course, there are rare exceptions where certain specialty hospitals or clinics are completely privately run, but even these have "trainees", usually advanced fellows (just finished general training). The Steadman Hawkins Clinic at Vail (think Kobe Bryant) comes to mind.

Second point. It is well documented in several studies that the chances of medical error and poor outcome are significantly less at teaching hospitals compared to private hospitals. The multiple layers of double checking, between nurses, interns, residents, and attendings is the main factor.

Finally, the main reason for my diatribe is that the underlying attitudes I get from comments like those from Peter and OO is exactly what I and many others in medicine hate the most about the job. Namely, patients come in who expect top-notch medical care, expect expensive tests and procedures, and expect them to be free b/c they're covered by insurance. On top of that, even though they expect to have a great doctor, they don't think about where these great doctors came from - do you all think that they just show up on the scene all educated and trained? Medicine is in the end a profession that basically relies on an apprenticing model of training. Teaching hospitals are the bargain we strike for having one of the best medical education systems in the world. Unless you can think of a better system, that's what you get.

Face Reality Says:

“To me, culture is 98% food. I hate to say this but CA is winning by a margin. (True, Boston has better chowdah.) ”

___

Boston clam chow-chow.

Phoenix has better restaurants than San Jo. And way more of them.

But here’s the economic truth: The Fed doesn’t set mortgage rates. When it “raises rates,” that just means it is removing money from the economic pipeline. Not only doesn’t this procedure increase mortgage rates, but over the long run it reduces inflation and permits the markets to lower mortgage rates.

Very interesting, as I hadn't realized that the mortgage industry had figured out how to set their own cost of capital. It's a financial miracle! No longer do banks in the business of lending need to determine their own cost of lending that capital by evaluating the overnight repo rates or government bond yields. Astounding!

Sarcasm aside, the reason that when the Fed raises overnight rates it puts upward pressure on mortgage rates is simple: The banks/institutions doing the lending have to demand more interest in order to justify using their cash to lend to you. If a bank can get better return lending to companies or with bonds, then they'll just do that instead. Thus the mortgage rates rise to the level where banks will lend you money to buy a house.

I'm ignoring all the micro stuff, which can drive mort rates up too as int rates rise. For example, even though inflation is falling, the risk of financial distress is rising because of the increasing cost of capital. That means homeowners are become more risky debtors in a rising interest rate environ.

Joe,

Montgomery County does have its share of liberal teachers, but not obtrusively so. I was lucky to attend a magnet program full of teachers who were brillant and cared deeply about teaching.

As for the kids, my mom works for the school district and she says she's seeing more rude kids and more kids throwing gobs of money around than was the case ten years ago. So it's probably best to steer your kids away from the richest school districts. Those districts tend to have a mix of monied (but by no means exclusively white schools) and poor kids from the county's affordable housing projects, so your kids might feel uncomfortable being stuck in between. I'm a product of the magnet schools, so I would recommend looking at magnet schools. I had classmates whose parents gave them new Benzes and BMWs and many classmates who had to pay their own way through college, and money was never mentioned in class or out of class.

Hispanics in the DC suburbs are not fresh from the border and the ones in the better schools usually have parents who deeply care about their education, and many of them are middle or even upper middle class.

Most of the Counties near DC, with the exception of Prince George's County, has at least a couple of good schools. I definitely think the situation there is much more middle class friendly than California, and the weather is not too bad. The winters are quite tolerable and warm compared to the midwest and northeast.

On healthcare, I think the rich like OO and FAB are not in a good position to speak about what this country needs and doesn't need from the healthcare system. They're only interested in the best part of the healthcare system, so they don't bother to think about the system the rest of us have to put up with.

I go about uninsured. The cheap coverage I could get is so limited that I'm financially better off uninsured. The cheap coverage doesn't give anywhere close to 100% coverage and does so with high deductibles. Thus, if I were to ever need the coverage, it's financially much better just to file bankruptcy (since most of my savings are in untouchable retirement funds) and get on medicaid.

SQT -

you could always start your own wordpress page. You wouldn't need to do much, just post the links and let the bloggers take over...

:)

LiLLL and SQT,

Thanks for the posts. However, I'm worried that a lot of readers probably like the convenience of going to the same page on patrick.net to get all the links at once, rather than scrolling down to our individual posts.

Despite that, here's my contribution, from the Mercury - this is their bold frontpage headline today!

http://www.mercurynews.com/mld/mercurynews/business/14976554.htm

Some choice quotes:

So it remains to be seen whether the Central Valley market woes soon extend to the Bay Area, or whether the slowdown inland is isolated and short-lived. - yeah, wishful thinking.

In San Joaquin County...nearly 4,000 existing houses were for sale at the end of May, about 3 percent of homes in the county and nearly 250 percent more than the amount in May 2005. - Yikes!

Tracy resident Elaine Tabasa, who commuted to Fremont for her job in high-tech marketing before she went on maternity leave a few months ago, bought a three-bedroom house for about $400,000 in 2004. She and her husband, Chris, moved there from Milpitas. She thinks the house is worth close to $600,000 now. They have no plans to sell soon, though someday she'd like to move closer to the Bay Area again.

``If we decided to move back to the Bay Area, we could take that equity from the home in Tracy, and use it to buy another house in the Bay Area,'' while keeping the current house as a rental, she said. ``I think our house is still a good investment.'' -These people are so screwed.

I wonder how many people did this - moved to the Central Valley in hopes of building enough equity to move back to the BA? Some will get out in time, but I fear many might find out they are stuck and cannot move back without taking a loss.

As many have said so on this board, the "fringe" areas will fall first and fall hardest.

The fringe areas may also become*fringier*

LiLLL,

This is already happening. I saw a piece on the local news (KTVU I think?) about how people in Antioch, clearly a fringe area in the BA, are up in arms b/c a lot of the new developments there have units rented out under Section 8 subsidized housing. I feel bad for these follks, but it's a very hairy subject to breech, in terms of class/race issues, etc. These people were complaining about the increase in crime, graffitti, etc. resulting from this. My initial thought was, which owners were signing up for Section 8 rentals?? Could it be flippers?

Governor Conan Says:

"Two kinds of people disdain money: Those who don’t have much and have convinced themselves that they can live happily without much money and those who were born with too much and never have never felt the need for money. "

I have heard inherited wealth (as in Getty) sneer on about how money is not important. But I suspect that money to inherited wealth is like air to the rest of us. We don't think about air because although air is needed, we have more available than we can use. Take away the money from inherited wealth and money will occupy thier thoughts as much as air would to a man trapped under water.

I go about uninsured. The cheap coverage I could get is so limited that I’m financially better off uninsured. The cheap coverage doesn’t give anywhere close to 100% coverage and does so with high deductibles. Thus, if I were to ever need the coverage, it’s financially much better just to file bankruptcy (since most of my savings are in untouchable retirement funds) and get on medicaid.

This is what kills me when reading a typical FAB "you can get medical ins. for only $56/month" rant. Anyone who has ever had to actually rely on such a policy (as in *gasp* actually get sick) quickly learns it's not worth the paper it's printed on. The cost for a truly comprehensive individual plan that actually has a chance of paying up when sick person needs it will run you anywhere from $200-500/month, depending upon your age, health & location. And for all those people who love to bash Kaiser, Kasiser is one of the very few companies out there that will accept people with pre-existing conditions. Pretty much all the other HMO/PPO plans prefer to cherry pick only healthy, younger people with no history of any medical problems.

Kaiser is also not for profit, so they're actually operating for the benefit of their employees and patients, rather than that of the shareholders.

California's overall healthcare system sucks though. The one time I had to use emergency service here, I was treated like a half rotted piece of meat and they totally messed up my billing and threw me into collections (I had good health insurance at a time).

The best scenario is to be born with lots of money but learn to be happy with very little money. This housing bubble has done just the opposite. There are so many people who've learned to live like they have tons of money but don't actually have the means to support themselves.

It's funny, we generally go to UCLA for our medical needs, even though it's on the west side and a bit of a drive. Their billing system is SO screwed up -- on at least two occasions, I've gotten letters from collection agencies before ever receiving the first bill from the hosptial!

And they have this annoying habit of sending like 20 bills at a time -- one for $5.63, another for $41.27, etc. There does not appear to be any rational basis for this; it's not like each bill is from a different unit of the hospital, or for a different test, etc. For some unknown reason, they just break the bills up into these miniscule amounts.

I am not persuaded by the argument that socialzied medicine is more "efficeint" than private medicine, and that we will all SAVE a lot of money under a single-payer system thanks to lower administrative costs. However, the system we have now is obvioulsy far from efficient.

California’s overall healthcare system sucks though. The one time I had to use emergency service here, I was treated like a half rotted piece of meat

I could start another rant about CA's failing emergency room system and the causes (hospitals being overwhelmed by illegals who can't/won't pay for ER services the government FORCES them to provide free of charge, etc.) but as we're already way OT, I'd better not go there.

SQT,
I'm glad things turned out well for your dad in OKC. If you're talking about U Oklahoma, yes, they have one of the top cardiology programs in the country, believe it or not. I've visited there several times for work collaborations in the past. The hospital is a massive sprawling complex. There would never be enough land in CA to build up something like that.

While CA's medical services is peripheral to the overall housing discussion, it does highlight the low quality of CA's living standards for the average middle class family. CA's overall education and healthcare quality has both gone down in the last two decades. The culture aspect really depends on your vantage point, but I'm not sure I'd want to raise any kids here. (If I'd ever had kids, I'd probably prefer to raise them in Shanghai in private schools, or in Australia or Canada)

The weather and food here is still fantastic, but those could be enjoyed on vacation. If I was rich or don't have kids, I think I can manage. But having kids here is just kind of scary.

I could start another rant about CA’s failing emergency room system and the causes (hospitals being overwhelmed by illegals who can’t/won’t pay for ER services the government FORCES them to provide free of charge, etc.) but as we’re already way OT, I’d better not go there.

HARM, I have to say that if an illegal has a true emergency, he should be treated because of humanitarian reasons. One solution is to reduce the population of illegals, through legalization or deportation. Neither is really doable.

Peter P,

I'd say that's why punitatively punishing anyone hiring illegals is so important. When they hire illegals for so little money, they're not just robbing the illegals with low money and work from legal residents, but they're also pushing the social cost of those illegals onto everybody else.

The great thing about that Crapatino house is that it would require both parents working at very high paying jobs. This so they can get the 'good' Crapatino schools? Funny that as they are going to shove Jr. into day care so they can also drive their fancy german cars. Strangers raising your kids, now there's a good idea. Ok from totally out in left field, how about this, the school doesn't really matter so much if you are there to help in your childs education. If the McDebtor has a high paying job chances are they are also highly educated, more education than the schmuck teaching at Crapatino jr. high. So fill in the holes at home. Idiots. Or you could just work 60 and buy more crap you don't need to fill up your shallow existence.

Mr Schmoe, my comments were of course not directed at you. Keep the faith, fight the power. Free your mind and your ass will follow.

I’d say that’s why punitatively punishing anyone hiring illegals is so important.

I definitely agree. That should be a felony crime. However, it is not going to happen. The second best option is

1. legalize their stay, authorize them to work, but deny them residency
2. tax them as US residents but give them no welfare
3. make them pay a special fine every year
4. make them pay all back taxes

I’d say that’s why punitatively punishing anyone hiring illegals is so important.

I definitely agree. That should be a felony crime. However, it is not going to happen. The second best option is:

1) Give them a '64 Impala, but not a SS
2) Let them have hydraulics, but no batteries.
3) Let them have 3-wheel motion, but sip of the potion.

Whoops, category 3 should read, Let them have 3-wheel motion, but no sip of the potion

Surfer-X,

Great observation about Cupertino school districts. Makes you wonder why they can't just live in a cheaper district and do home schooling in conjunction with other parents.

Schmoe at Law, have you filed our class action suit against the boomers yet? Why I think you should be happy living in a crappy apt. you think all that schooling, talent, hard work, and suffering can possibly replace getting high and having group sex? Dude, 60 is so the new 20. From what I can see the boomers will never let us up to the Masters house. The boomer I share an office with had me help him with excel yesterday, seems Holmes couldn't select non-contiguous rows of data. Oh and he has me get data for him which he then puts his name on. Is my name found anywhere? They aren't going to go away, they are going to stay on the job until they are in their 70's. We need to formulate a plan to oust them.

Surfer-X,

If those boomers are out of a job, guess who they'll depend on to support them? We're screwed no matter what we do.

SFWoman Says:
Yesterday’s article in the WSJ really should help burst the bubble. The manager of the best performing real estate mutual fund over the past ten years in the US said that prices could come down about 50% in California, Florida, the Northeast and other bubble areas.

Hm. The folks who are crowding the open house across the street as I write this (on a weekday!) may not have read that article.
They're falling over themselves, and there's no parking left within about 300ft up and down the street.
The house is listed for $1.2 mil. It's a nicely remodeled 2000SF 4BR rancher on a rather large lot in West San Jose. Nothing special, though.

(For those who are keeping track, the house for sale I'm talking about is different from the one I posted about a few weeks ago, also across the street. That one sold and stayed sold. Asking price was $1.3 mil, no sale price in Zillow yet.)

I don't know what to think, really.
On one hand, I think it's great that folks who still have too much money on their hands are keen on sinking it into a depreciating asset, so that when finally everybody has theirs and/or is fully leveraged, prices can come back to fundamentals.
On the other hand, I'm starting to question my own convictions (which I should have in early 2002, when I was convinced that the bubble would pop, learned about multiple offers for crappy houses at a much lower level than now, and continued to deny reality).

The scary thing is that with every such sale, paper gains become real money which starts to slosh around. Now there's real money in the seller's bank account, and there's real money to be repaid to the lender over the next 30 years.

@Girgl, San jose, especially West San Jose is a paradise on earth. 1.2mil, shit, that house should go for 1.8-2.2 mil. The FB's should consider themselves lucky to have such a place. You are correct that it is real money, in their pockets. I say get one and watch your future savings grow.

This is what kills me when reading a typical FAB “you can get medical ins. for only $56/month” rant.

If you go back through FAB's comments, you'll find that this is the same fount of knowledge which declared that public schools in Mill Valley are dangerous because of too many black people, professional women are the enemy of proper families, middle aged men can copulate with over a hundred women while simultaneously declaring that younger women are increasingly sluts, only conservatives have a greater than middle school science education, and that poor folks shouldn't have babies.

Elitist naivete aside, such wisdom is what we're likely to see more of as things continue to slide.