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JodyChunder
2012 Aug 29, 11:43am
They supplied the crack, but they didn't make anyone smoke it.
Actually, there are documented instances of them making people smoke the crack. So to speak, of course.
There was more than just sub-prime predatory lending. There were forged documents and outright sleight of hand as well.
JodyChunder
2012 Aug 29, 11:47am
On $40k income a family of four doesn't pay federal or state income tax
They still pay payroll taxes, which, before the crisis, made up something like 34% of tax revenues. Incidentally, that's more than the corporate income taxes which presently make up 14.4 percent.
hj2222 says
We have several friends who were completely ruined by the banks and their packaged mortgages. Two lost their homes due to inflated prices and increases in mortgage payments every month. Another family is living in a home that they owe over twice as much as the value of the home. Also a Wall Street and Banking greed result.
This sucks, for sure...I'd hate to find myself in that situation (unlikely), but what I don't understand is why it matters in the short term. If they bought a house they could afford to pay the payments on, and it tanked in value...they should still be able to afford the payments, right? I get it that in the long term they end up paying more than the house is worth, so it's a net loss to their net worth...but it shouldn't affect their situation now. Yes, they made a bad decision (and maybe were lied to), but they have 30 years to recover from it. Unless their payments went up when they were told they wouldn't...or something crazy like that.
Yes, fortunately he did not lose his job and they can afford the payments... which went up as the tax assessments increased, but that has leveled off for them finally. They are in better shape than the other 2 families, but as you stated, it has decreased their net worth which affects a lot of their financial options. Refinancing, auto loans, home improvement loans, credit reports etc. They look like they are a high risk now and can not look forward to any relief for at least 15 years. So, they are seriously affected by this.
Also I would like to note that in 1995 when I bought my first home, the guidelines and qualifications were in place to prevent the buyer (me) from getting in too deep. They took a good look at my finances, qualified me for a home I could afford and I was gently guided along the way to a perfect 30 year fixed mortgage. Alternatively, during the stampede that we all saw in 2005, the agents and mortgage companies took every applicant they could find and put them into the largest loans they could get the buyer to agree on. They lied and told the buyers that houses were going up and that they better buy now and they should buy large so that they can make a large profit on resale. They did not check incomes, they did not check jobs, they did not verify references. They used scare tactics and emotional tactics to make buyers feel like if they did not buy now, they could never afford a home. Meanwhile, the loan brokers were being paid huge bonuses for every loan and the bigger the loan, the more money they made. The Real Estate agents were getting huge commissions and the mortgage companies were making bank packaging these loans and selling them on Wall Street. Remember, these are new home buyers who relied on the Real Estate and Mortgage industry to guide them... as they were told by their parents they would be. The blame is clearly set on the agents, brokers and mortgage companies. They swindled buyers and lied to them. I know this first-hand because I was with one of my friends when they purchased. I was at the showings and the signing of the contract. I heard it all. Heck I was even drawn into the urgency of it. It was very well played.
So in the name of greed, in 10 years, the entire industry went from responsible and caring... watching out for the buyers, to completely destroying them in the name of greed.
hj2222 says
I dare say that if you had lost your entire nest-egg and your home, you may be seeing things a little more clearly.
Again, that would suck, for sure. But how did it happen? How is it that you lose your entire nest egg? Do you invest in the company stock where you work or something [really insane] like that? Yeah, my shit took a big hit when the economy tanked...but I mostly recovered...lost several years, but I was reasonably well diversified, so it's not that big of a deal -- certainly nothing _close_ to losing my whole nest egg...
It was not me who lost it. It was my mother in the example above. She was divorced late in her life and knew nothing about money. She trusted the Investment Company that the hospital had hired to handle retirement plans. She knew nothing about diversifying and just let the fund grow. She did very well for a long time. Then the investment company went risky and put a large chunk of everyone's retirement into some type of stock. Some fine print somewhere said it was OK. So everyone there lost all of their retirement. What was not lost in the investment was lost covering negative balances from the stock investment. I am not sure how that all works, but they all lost everything. The investment company was not punished and made no excuse. They did what they did with other people's money. They had their butt covered with some clause. So again, the wealthy toying with us in order to increase their own wealth. This did not work out for the investment company, but they did not lose anything. It was other people's money they invested. I think that there should be accountability for this type of behavior. Causes should not be found in 20 plus pages of summaries and legal speak. These people were billing agents, janitors, x-ray techs, receptionists etc. They did not go to college to learn the ins and outs of financing. The expert is the one who should be watching out for the client. It should be an inherent responsibility.
I do feel sympathy for the people who got ruined in the whole mess...but at the same time *they* are the ones that drove house prices up as to make them unaffordable for me. If they hadn't been making stupid financial decisions, the demand wouldn't have been there, and I could have bought a nice house by now. There is plenty of blame to go around, for sure, but I believe a meaningful portion of it falls on the home buyers. Sorry.
You are incorrect. Do we blame the student for what the teacher teaches? Do we blame the sick patient for the Doctor giving the wrong advice? This is an industry that has been backed by the government and has historically taken care of both buyers and sellers. Strict rules and qualifications to prevent foreclosure and default. THEY did this. Not the buyers or the sellers. The industry saw an opportunity to make a ton of money and they all jumped in.
See? That's the problem right there. You expect too much!
You would say that. That is a moronic thing to say. People need to have some expectations or they won't try harder. And it sounds like this person is trying and hustling. It is the fault of big business if this nation goes down because of a greedy 1 percent who cannot see the importance of a middle class.
Gary Anderson strategicdefaultbooks.com
CL was being sarcastic :)
Without securitization, the easy money would have stopped. You don't get it.
Yes, I get it...I just don't buy into it 100%. Sure the bankers planned it, so what? The used car salesmen plan "it" too...but the buyers still have a choice in the matter.
JodyChunder
2012 Aug 29, 1:19pm
The used car salesmen plan "it" too...but the buyers still have a choice in the matter.
This is a great analogy. Except that the used car salesman doesn't take insurance out against the lemon he sold you, which pays a tidy premium when the car has brake failure descending a steep hill. Also, the used car salesman doesn't have a big red hand in drafting policy designed to make the playing field uneven for the non-elite classes, tempting the larcenist in all of us. The behavior at the upper tiers of American industry abetted by the nonfeasance of our lawmakers creates a criminogenic environment in the rest of society. Larceny begets larceny.
JodyChunder
2012 Aug 29, 1:29pm
What happens to this country when apathy gets the best of us?
I'll tell you what happens: we become a bunch of Ayn Rand-reading, technocratic, antipathetic automatons pushed through our ruts by psychotic systems managers.
It's hot in Victorville tonight, and Jody's letting off some steam...
Meanwhile, the loan brokers were being paid huge bonuses for every loan and the bigger the loan, the more money they made. The Real Estate agents were getting huge commissions and the mortgage companies were making bank packaging these loans and selling them on Wall Street. Remember, these are new home buyers who relied on the Real Estate and Mortgage industry to guide them...
Yeah, if they were looking to the RE agents and bankers for financial advice, I understand how that could go wrong. I guess that's a big part of my point -- that was a mistake. I guess in the past you could rely on them for disinterested guidance and advice, but that never crossed my mind when I was buying. Maybe it's too much to ask of the typical buyer, but I always saw the RE agent and the banker as my adversary, or at least as people who couldn't be trusted.
So in the name of greed, in 10 years, the entire industry went from responsible and caring... watching out for the buyers, to completely destroying them in the name of greed.
I think you are romanticizing it a bit. Sure, it got a lot worse, but I've been hearing about how you can't trust a real estate agent for as long as I can remember.
She trusted the Investment Company that the hospital had hired to handle retirement plans. She knew nothing about diversifying and just let the fund grow. She did very well for a long time. Then the investment company went risky and put a large chunk of everyone's retirement into some type of stock.
I think her employer (and certainly the investment company) failed her. That really sucks -- sounds almost Enron-esque. It's too much to expect everyone to be savvy with investments, so you do have to have a level of trust...sounds like these guys blew it.
You are incorrect. Do we blame the student for what the teacher teaches? Do we blame the sick patient for the Doctor giving the wrong advice? This is an industry that has been backed by the government and has historically taken care of both buyers and sellers. Strict rules and qualifications to prevent foreclosure and default.
First, I don't see the parallel between the teacher or doctor analogy. I guess if I bought in to the "RE agent and banker are your friend" part of it, I would get it. The banker is going to be governed primarily by profit and risk -- in the past they had stricter underwriting, less government backing, so they paid attention and didn't loan to someone who couldn't afford it. They didn't do this because they were your buddy, it was the profit motive at work. We need to put the failure part back into lending. But at the end of the day if the people taking loans were making good decisions, this wouldn't have happened. I think what you are saying is that the people aren't capable of making these decisions...which I don't want to believe, but maybe you are right. Has the world become too complicated to expect people to be responsible for their own decisions?
Shit, am I turning into a Republican?
Raw
2012 Aug 29, 1:47pm
@dodgerfanjohn and @raw, You both are mistaken. My husband and I have managed to work it out, but we were lucky. We are far from where we should be at this point in our lives, but we are in better shape than those I speak of above. This should be evident since it is after library hours and I am clearly on the internet. This would be a frivolous extra expense if in the situation I am discussing.
Oh Gawd. You should be a realtor. You could whine and whine until your clients bought something just to get you off their back.
Yeah, if they were looking to the RE agents and bankers for financial advice, I understand how that could go wrong. I guess that's a big part of my point -- that was a mistake. I guess in the past you could rely on them for disinterested guidance and advice, but that never crossed my mind when I was buying. Maybe it's too much to ask of the typical buyer, but I always saw the RE agent and the banker as my adversary, or at least as people who couldn't be trusted.
You seem like a pretty savvy investor. You know your stuff. You know who to trust and what to believe. That is an awesome thing for you. However, there are a ton of other less informed people out here in the world who do not have your knowledge and we do rely on experts for guidance.
With the history being clear, that the agents, brokers and mortgage companies were responsible and careful in the complete history of lending, why would buyers have any reason to expect a complete turn around?
It would be helpful, in this discussion, if maybe you would realize that your knowledge is not the same as everyone's, and in knowing that maybe you would be able to see how so many were taken advantage of. I have specific knowledge about things that I am sure you do not have, but I would not belittle you or make you feel stupid for not knowing what I know.
I think you are romanticizing it a bit. Sure, it got a lot worse, but I've been hearing about how you can't trust a real estate agent for as long as I can remember.
That's good for you, but not everyone has the same information.
First, I don't see the parallel between the teacher or doctor analogy. I guess if I bought in to the "RE agent and banker are your friend" part of it, I would get it. The banker is going to be governed primarily by profit and risk -- in the past they had stricter underwriting, less government backing, so they paid attention and didn't loan to someone who couldn't afford it. They didn't do this because they were your buddy, it was the profit motive at work. We need to put the failure part back into lending. But at the end of the day if the people taking loans were making good decisions, this wouldn't have happened. I think what you are saying is that the people aren't capable of making these decisions...which I don't want to believe, but maybe you are right. Has the world become too complicated to expect people to be responsible for their own decisions?
Shit, am I turning into a Republican?
Regardless of the motive for being careful and selective, that was how it was done. This information was shared in family discussions and friendly advice. It was 'the norm'.
I am not saying that people are not capable of making decisions, but when you look to an industry that has been consistent since its beginning, there is a level of trust there that you will be protected from a bad purchase by the industry qualifications and guidelines. As I stated before, how would we all know that the game had changed unless we were told?
When this craze to make huge profits off unsuspecting buyers started, ALL the rules changed. But no one told the buyers. There were no warnings, news releases, articles... nothing to indicate that what was being said to them was a lie.
The doctor and teacher analogies make sense to anyone who is not as educated about the industry as you are. To me and millions of others, we relied on the agents and the mortgage companies to be mindful of our financial situations and selective about what we would be able to afford. They are the experts, after all. They have knowledge. There were formulas used when I bought. I had to tell them how much money I made, I had to give them copies of all of my bills and bank statements, I had to show them pay stubs and old tax returns. Credit reports with an explanation on every item showing on the report. That, IMO, was to protect me as well as the bank. They threw all of that out the window and new buyers who had never purchased a home before and even those who had were suckered into thinking everything would be fine and dandy.
People being responsible for their own decisions works both ways. They were irresponsible for doing what they did, yet they get a bailout for billions of dollars for making terrible loans to unqualified people. The people who were taken advantage of lost everything and are now blamed for being ignorant of the predatory practices and should have known better. That's just wrong.
I don't know what to tell you about the Republican thing. I wonder if there is a even a difference between parties any more.
Oh Gawd. You should be a realtor. You could whine and whine until your clients bought something just to get you off their back.
Thank you for your adult and oh-so-valuable input on the subject.
What happens to this country when apathy gets the best of us?
I'll tell you what happens: we become a bunch of Ayn Rand-reading, technocratic, antipathetic automatons pushed through our ruts by psychotic systems managers.
It's hot in Victorville tonight, and Jody's letting off some steam...
I have no idea what you just said, but I think I agree....
With the history being clear, that the agents, brokers and mortgage companies were responsible and careful in the complete history of lending, why would buyers have any reason to expect a complete turn around?
I don't know this to be false, but I don't believe it to be true. It sounds like a fairy tale to me.
if maybe you would realize that your knowledge is not the same as everyone's, and in knowing that maybe you would be able to see how so many were taken advantage of.
I get it. Where does it end, though? (the measures we should take to protect people from themselves...) You are saying, basically, that many people aren't savvy enough to buy a house or understand finances and their limits, and so there needs to be some mechanism that either helps them make the right decision, or doesn't allow them to make a bad decision. In the past, you suggest (I don't agree) that the lenders and RE agents filled this role. Now that morality has broken down (or something else happened) we need something else. What is it? More government oversight and disclosures? I'm sure there were plenty of people who got confused into the whole deal, but at the end of the day I still think people are responsible for their decisions. In many cases the should have known better, and probably did but just didn't have the self control to say no.
I have specific knowledge about things that I am sure you do not have, but I would not belittle you or make you feel stupid for not knowing what I know.
I'm sure you do, and if I stepped into that realm to make a decision that would affect me in a meaningful way, I'd want to have some informed advice. I would try to avoid getting the guidance from someone who stood to gain from my decision -- isn't that something we can expect from people? A basic understanding of how the world works.
A few thoughts.
I understand your point and I am more sympathetic to them than it might appear.
This discussion has caused me to reconsider some of my biases. I know people who have made bad house decisions as well, but I can't think of any of them who didn't know / didn't understand what they were doing, they did it because they were irresponsible or didn't care. It's easier for me to blame them -- "they deserve whatever they get because they were willfully irresponsible"....As for the people who aren't sophisticated enough to understand what they were...yeah, that's a harder one. I'm not comfortable saying "they deserve it because they are dumb."
For the most part I consider how something affects the whole to inform my opinion on it. From that vantage point the idea of government controls over lending seems like a good idea -- prevent this mess for all of us from happening again. I do bristle at the notion of even more government control and oversight. It's a necessary evil in general, and maybe this is a good place for it.
I think our biggest disagreement is that the homebuying process was so different back in the day -- at least on the RE agent side. Even on the lending side I think it has often been easy to buy more house than you should. Maybe it just wasn't catastrophically more, so it all worked out ok.
American in Japan
2012 Aug 29, 3:13pm
@Edvard2
>Get a beater Honda or Toyota. 15MPG is pretty bad fuel economy. We've drive 30+ MPG beaters for years. Makes a big difference.
Especially with gasoline at $3.50+/gallon.
YOu still don't get it. By taking away the underwriters, the banksters were guilty of a scam, a fraud. They were the Madoff times a thousand and the victims were the people who had no idea that their loan would come back to bite them. Remember, the realtors were in bed with the banksters, because the banksters told them to tell them they could refi later.
It is a classic fraud.
I still contend that if the people taking the loans had made good decisions (which is possible to do), then it wouldn't have happened. Maybe people on the whole can't be expected to make good decisions. In the end, it still takes two to tango, and just because someone enables you to make a bad decision, nothing bad happens unless you make that bad decision. The guy on the street corner selling hookers and heroin enables you to do something destructive...but you walk past (I presume) because you know better.
I get it. Where does it end, though? (the measures we should take to protect people from themselves...) You are saying, basically, that many people aren't savvy enough to buy a house or understand finances and their limits, and so there needs to be some mechanism that either helps them make the right decision, or doesn't allow them to make a bad decision. In the past, you suggest (I don't agree) that the lenders and RE agents filled this role. Now that morality has broken down (or something else happened) we need something else. What is it? More government oversight and disclosures? I'm sure there were plenty of people who got confused into the whole deal, but at the end of the day I still think people are responsible for their decisions. In many cases the should have known better, and probably did but just didn't have the self control to say no.
I think that any industry involved in a private person's purchase of a home should be made to be held accountable for everything they disclose to a potential buyer and that they should be made to have unbiased witnesses if there is any doubt of their honesty. A home is a monumental purchase to most people in this country. I think it is dangerous to our country to allow millions of Americans to be taken advantage of in such a large purchase. The entire country suffers when over half of America loses their good credit standing and every state is flooded with empty homes. You already know how that has affected the country. If the Real Estate and Mortgage industry had not played those games, and had continued to use the same standards and procedures they used in 1995 when I bought, this would never have happened. Home prices would not have skyrocketed, the banks would not have been tempted by the promise of extreme profit and empty homes would not be flooding the market. No one would have lost half their home value and things would be moving along as usual. We still have the problems with corps taking jobs away, so I believe we would still have economic problems, but they would not be the size of what we are dealing with now.
I agree that some people chose to look the other way and bought knowing that they would be in trouble, but the masses, at least in my opinion based on my own conversations with people I know, were tricked. I think if more were done to punish those who were blatantly dishonest with buyers, I would not be so passionate about the subject. But when I have seen it with my own eyes.. and heard the agent give a price and advise to go interest-only and that the payment would be $xxx, only to find that 2 months after the loan was closed that the payment went up to $xxxx, what else can I feel besides contempt and anger towards those who got paid while my friend got taken to the cleaners?
To find the blame, should we not look at who benefited from all of this? Real Estate agents in bed with mortgage companies and brokers got paid well. The mortgage brokers were paid well. The banks... well they got the loans, they made money selling the loans, they got a bail out when they could not make good on the securities they sold, they got interest on the bail out money because they did not loan it out for modifications as agreed, plus they get to charge higher interest for poor credit on all those who lost their homes. Oh, PLUS they GOT THE HOMES and many of them got paid by the mortgage insurance the buyer was forced to pay for. I never did understand that scheme or how it was even legal.
Regulation as far as integrity and accountability as well as complete disclosure for any home purchase would have my vote. Its too late for the millions who got taken and its clear no one will pay the price except the buyers at this point. Still, we must protect our country and our citizens from any type of corporate deception in the future. Especially now when almost every industry and corp has shown us their indifference to our suffering when it comes to their bank accounts.
I think our biggest disagreement is that the homebuying process was so different back in the day -- at least on the RE agent side. Even on the lending side I think it has often been easy to buy more house than you should. Maybe it just wasn't catastrophically more, so it all worked out ok.
It is entirely possible that you don't see the difference because you knew what was going on and how to manage the purchase.
The Real Estate agent can only do what the mortgage company is willing to do.
But if you look at my example of my 1995 purchase and compare to the no-doc no-qual sub-prime loan factory we had operating in 2005, it is obvious that a lot had changed.
This has been a very nice discussion and I am glad that your prospective has changed even slightly.
Regulation as far as integrity and accountability as well as complete disclosure for any home purchase would have my vote.
What was it that wasnt disclosed ?
Count the Thousands of readers on Pnet who knew of many others who denied the existence of a housing bubble. Their hunger for RE was bigger than their stomach.
I have known many who migrated to SFBA who actually believed $750K for a 1400-1500 sq ft 50s shack was normal. They couldnt understand such homes were a third of their purchase price a fews years earlier.
There just wasnt any amount of disclosure that would have prevented buyers from over paying/over borrowing. Where was the common sense among buyers ?
JodyChunder
2012 Aug 29, 5:23pm
I don't know what to tell you about the Republican thing. I wonder if there is a even a difference between parties any more.
One is ever so slightly more batshit than the other.
Eman
2012 Aug 29, 5:28pm
Get a second job. It's not a crime.
Now redo the math.
Or a third. Sleep is so overrated
I couldn't stop chuckling every time I think of this. Too funny. :)
People that make excuses for crooks are disgusting pieces of garbage who will burn in hell!
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.
Go to college? Really? Sure, we don't have 2 pennies to rub together, but hey... let me quit one of my 3 jobs and get loans to the tune of $20k or more
Community colleges let you take classes for $100/credit hour ($12K for a four year degree). Split over enough years (I know people who graduated from a grocery store to Bell Labs that way) that's priced competitively with your son's smart phone plan. Stafford loans can cover the costs of living while earning a degree for more immediate gratification.
, keep my other 2 jobs while I am at school and just not sleep for 2 or 4 years, and then apply to every company that would respect my new degree and then have to take my old job back at McDonald's because there ARE NO jobs available for new graduates with no experience.
While it's no longer possible to get a job with _any_ degree _some_ degrees earned at _state_ schools make financial sense.
A philosophy degree will qualify you for law school, although without getting into the top 7? you're likely to have problems making enough to pay for the loans.
Starting compensation at the big Silicon Valley companies is over $100K for new graduates (although rent's likely to be $2000 a month). Many software companies hire a _lot_ of new graduates because they can't hire enough more experienced people. Even startups are hiring new graduates for their first real job. I got a minion straight out of UC Santa Cruz.
One of my nieces is doing fine after getting a nursing degree. Our daughter earned a geography degree and became an urban planner.
@Edvard2...Rent a room? That is assuming there is a room to rent. Most rents are out of touch for anything more than 1 bedroom.
There are plenty of rooms to rent.
College towns have off-campus student housing offices which list rooms for rent and pair people looking to split rent on a larger place with a lower per-person costs. Those offices are often not-for-profit and open to non-students.
There are for profit rental companies which match room-mates to each other as one of their services (http://www.housinghelpers.com).
Hippies often take house mates to live in a more affordable and ecologically sound way. You'll find their co-housing advertisements at natural food stores and presumably other places they congregate.
People with low wages compared to local housing costs often split places. They advertise on bulletin boards at work, in grocery stores, convenience stores, etc.
Craigslist has a "rooms and shares" category.
It's not the "adult" thing to do, although where that can mean working 15 hours less each week or more money for discretionary spending lots of people find it the right trade-off.
I sat with my 22 year old son and tried to help him work out what he needs to survive. With the figures we came up with, after rent $650,
When I started living on my own I got a room in a house for $300 because I couldn't afford $500-$600 for a one-bedroom apartment in the expensive town I was living in.
power $120,
House mates also meant that my utility bill was a lot less.
Phone (cell only) $110,
Your son does not NEED a luxurious $1320 / year data plan that he must work four hours a week to pay for. Although I'm a Silicon Valley geek with two children in their odyssey years I wouldn't buy one for myself. A $45/month Cricket phone with unlimited talk and text would save $780 a year. The $10/month + taxes it cost to add each of our adult children to our cellular plan (voice and text only, unlimited calling to us) beats that by nearly $1200. A $17.96 T-mobile phone from Walmart plus a $100 1000 minute charge may be attractive.
food, $300, bus pass $40, clothes for work $50, Incidentals (shaving, bath laundry soap) $75, laundromat $60, save $200 a month for medical emergencies (no one will hire ft so no insurance benefits)
Where a broken leg can run $100,000 (I had three operations for mine) and sports medicine people whose goal is to completely rehabilitate you (as opposed to have you walking but not running or playing ) won't talk to you without insurance that's a bad plan.
I pay $110/month for my adult son's PPO insurance. Without pre-existing conditions that preclude getting an individual policy you really want to do that.
freak80
2012 Aug 30, 3:56am
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
BayArea
2012 Aug 30, 8:41am
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?
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.
coriacci1
2012 Aug 31, 1:02am
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
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
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.
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.
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.
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.
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.
John Bailo
2013 Nov 2, 7:02am
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.
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.
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.
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