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Option Dude,

Welcome! You took stock of the problem out early and I am confident that you will be able to extricate yourself from this with a minimum of pain. Please keep us posted!

Astrid,

It's not just about the kids. As some of my rapper clients say in their songs, I want to get PAID. I've deferred gratification for a long, long time, and I'm sick of it.

I am tired of going to work in Beverly Hills and coming home to my one-bedroom slum apartment.

My job requires me to assume enormous responsibility. Millions, and sometimes even billions, of dollars are riding on the decisions that I make. I work very hard to do a good job, win my cases, provide good advice, and earn a great deal of money for my law firm. It's stressful as hell. I have to generate top quality work product every single day. This is intellectually and emotionally demanding.

To be sure, there are people with harder jobs -- doctors, soldiers, priests -- but my job is quite difficult. It's a hell of a lot more difficult than working at a gas station. But my neighbor works at a gas station, and we live in the same apartment complex. This arrangement isn't going to work for me any more.

I've (pardon the expression) busted my ass and lived well beneath my means for the last 16 years.

I want a house, and I want it now. More to the point, I want to get out of this apartment -- now. Right now, today. If the law firms in Los Angeles aren't willing to pay enough to enable me to buy a house, then I'll move to a city where I can. My employer will just have to find someone else. It's too bad -- I like my job, a lot. My boss is an exceptional lawyer, and I respect him and am learning a lot from him. I would like to stay. But I am not going to work as abig shot entertainment lawyer and live in this goddamned apartment any more. I have had it up to here with this.

Joe,

If you make important decisions on a billion dollars, you should be able to take a fat cut. It sucks that you can't afford a decent place with this kind of work. You are being exploited, BIG TIME. Why can't you start your own business/firm?

I think across the board in the Bay Area, there’s a simple acceptance (maybe even an expectation) that 60 hour work weeks can only provide you with crappy schools, crappy houses, crappy traffic, and no disposable income.

Do engineers really work 60 hours? How silly. I guess if they like to work so much they should not complain.

Joe and Astrid,
Thanks for the kind comments, and kudos. I know that there are many people out here who revel in the misery and demise of us in the pinch. I don't really blame them, as I can empathize with their position. However, if rates plummet because of interest rate hikes, housing will likely come down alot, but getting into the game at higher rates will be bad initially, until a person can refinance, if rates later come way down.
Pondering Joe's situation, I am reminded of some of the most important aspects of life which are the most fulfilling, family, friends, enjoying good health, making an appreciated difference in the lives of others, enjoying nature, and all of the small things that make life enjoyable. As we are living now, and not in a dress-rehearsal, I support you Joe, in creating that place and life circumstance that will give you the greatest peace and satisfaction.

GC,

To start your own firm, you need clients and capital. I have neither. Well, I have a few clients, but they don't need that much legal work, so they don't generate enough business to permit me to pay the bills. To start a my own high-end litigation practice, I'd need a minimum of $400,000 in capital. And that would be the absolute bare minimum amount, enough to give me a fighting chance and not much more. I'd have to do all of my own secretarial work and open up an office in the cheap part of town, etc. You really need a lot of seed money to succeed as a plaintiff's lawyer, it's an expensive business.

I also have a wife and two kids to feed, clothe, and house. Additionally, I get a bill each month for $1,200 from my student loan lenders.

I would very much like to have my own practice someday, but it takes a long, long time to develp the web of professional and social connections necessary to generate enough business to pay the bills.

I only know two young lawyers under the age of 40 who have successfully started their own practices. One comes from a wealthy family, and I think they financed her in the early days. She is doing quite well now, she was a CPA before going to law school and defends CPA's in malpractice cases. The other guy has an office in one of Los Angeles' Hispanic ghettos. He grew up in the neighborhood and still lives at home with his parents, so his expenses are minimal. I think he will be quite successful, as he is a damned good lawyer.

These are the only two examples I can think of, and I know probably 100 lawyers under 40. A couple of other people have started practices; one failed, and the other is just sort of limping along; his wife is a dentist, so she can pay the family's bills during the lean times. But there is a reason why the other 96 of us are still working for other people. It's not easy to start your own practice these days. It's always been a challenge, but today it is even harder.

Why? I am not sure. There are a lot more lawyers per capita today than there were, say, 30 years ago, and that undoubtely has something to do with it. But I also think demographics are a reason. The Boomers control all of the legal work. The general counsels are all Boomers, the succesful lawyers are all Boomers, the government officials are Boomers, etc., etc. They tend to refer business to one another, and it is hard for someone who isn't a member of the club to break in. This isn't because of some conspiracy; it's just human nature.

Most lawyers get business from the people they know. For example, my own clients are mostly tech people, because I know a lot of tech people. A few of my clients are soliders (I don't charge them, obviously) because my friend Ed is a solider. A couple of clients have followed me from firms I have worked for in the past.

But as a lawyer, you generally don't really start generating business until your peers become established and successful. Most of my peers are not yet in a position to need much legal work. Nor are they in a position to pay for it. Those who work for large companies are not yet in a positition to hire and fire lawyers on behalf of the company. They will be someday, but not yet.

Right now I am trying to put myself in the best position to get the legal work once the floodgates finally do open. For example, there are very few complex litigators with trial experience these days. There just aren't that many jury trials any more in big cases. The only people who try cases are personal injury and criminal lawyers. So I am getting trial experience. When the time comes, I will be able to sell that expereince to clients.

Option Dude,

sorry to hear about your situation first hand.

Having seen this happen to people I know in other places of the world, I'd say your best option is to unload, at any cost right now, as the maret just starts to crumble, there are always naive buyers at the first stage of a bust. Dumping right now biting the bullet is tremendously better than paying month after month into a big black hole which will suck decades out of your life.

If you want to tough it out, there is also another option - which will require you to take a serious step down in quality of life. Divide your house up in a multiple compartments and rent to longer-term tenants.

But I personally would have chosen to dump it right now over a heartbeat. As long as you have no illusion about the situation, you are already way ahead of the other FBs who are still waiting for a summer bounce.

Option dude, sorry to hear of your dilemma. You should be fine as you are aware of the issues which sadly most are not. While I fanaticize about reveling in people’s misery it is simply just too mean to poke fun at people in that position. I think that is one of the large aspects of the bubble beast, people are going to get hurt, badly. Unfortunately people will get hurt simply because they were in the wrong place at the wrong time. I hope your situation works out for you.

Joe Schmoe, dude, the man is giving you the high hard one. how about a class action suit against the boomers? I would sign up.

fuck the joint driller, bust out the pharma grade blow.

Joe,

That sounds good. You have a plan. How about letting your tech friends invest in your future law firm when the time comes? Or are people generally scared of going into business with a seasoned lawyer? (Just kidding)

SQT, littlered seems mighty close to troll, trollbgone?

GenX are 43-25 (1963-1981). Some consider '61, '62 to be cusp years. Some cut off GenX at 1977 (29). It sort of depends upon whether one considers GenY to be really just the second half of GenX, or a new generation. By previous generational periods, GenX & GenY are the same generation, and mostly children of Silent Generation parents (not Boomers), with a sizable minority being children of Cusp-Boomers or leading edge Boomers. Most Boomers have children younger than 29 in the "Millenial Generation/Internet Generation". Those who began graduating High School around 2000. There is another new generation who began being born around 2000/2001 that are being called "New Silent" and have only GenX/Y parents, no Boomers.

Most of the rants here against Boomers end up indicting older Gen X'ers or Silent Generation (1925-1945), because everyone thinks everyone else is a Boomer. The "Greatest Gen" or "GI Gen" are mostly dead or not talking much anymore (1900-1924...if you weren't born by '24 you probably weren't a GI in WWII). They definitely aren't selling houses much these days.

Just keep in mind when you spout off how much you hate everyone that you're probably talking about a good part of your own generation or your parents instead of Boomers. For the record, I'm not a Boomer by any measure; just kind of sick of generational warfare.

There is another new generation who began being born around 2000/2001 that are being called “New Silent” and have only GenX/Y parents, no Boomers.

That's a bit young to be judged silent already! Let's give them a chance in their 20s at least, may be they will say something...

ajh:
>>Australia’s minimum wage is about the highest in the OECD at about $12/hr, but at least it ensures survival without having to turn to crime.

On the other hand, my nephew knows a lot of people at the bottom of the heap (and yes, even in Canberra we have an underclass).

i've heard about it -- rural poor, heroin addicts, etc...

If these people work at all, it’s in the black economy for 2 reasons; firstly that they are not employable at $12/hour and secondly because documented employment would seriously interfere with their welfare benefits. When you actually see a poverty trap in operation, it’s an ugly thing.

yeah, somewhat. i've encountered 2 generations of people living in public housing in a neighbourhood in wollongong recently, they have a nice life, really -- 2 blocks from the beach, and a bungalow on a block of land. if they start working, they get to keep the place, but the rent goes up a bit. and they get offered to buy the place by dept of housing for well under market, e.g. 300K instead of 500K -- a lot of people have taken up the offer then immediately flipped the place for 200K profit, and put it onto a new cheaper apartment elsewhere. beats working for a living...

Joe Schmoe,

I know of an attorney in DC who's only 28 who apparently takes home $500K a year, 300K base and 200K bonus -- doing corporate defence work... what's that about? is that common in US? he hasn't started his own practice, just an associate... it seems to be everything to do with the choice of client as to the payoff... that seemed incredibly young to me, but there you go... similar to lobbyists in DC that expect to make 500K p.a., it's not worth getting out of bed for less...

Joe,

I understand where you're coming from. LA/BA/NYC/BOS/DC are all serious rat races, and it must be tough with kids. If you relocate, consider renting for a while before buying. I think the stigma of renting is dissipating in most major urban areas, esp. the upper income areas. And it might be worthwhile to be on the sidelines for a while before making such a large financial commitment.

I just crossed the Rubycon today: I turned 40. Yikes!

Are there any words of encouragement from those who've
soldiered on before me?

I'm a little nervous about the whole thing. Seems surreal.

Thanks!

_____

Option Dude Says:

'...The old Chinese curse comes to mind, “May you live in interesting times.” '
______

Tough times demand new Chinese proverbs. How's this?

"When you bend over and grab your ankles, may they oil and lube you up very well."

Maybe it's time to start a thread of New Chinese Proverbs for Tough Times.
That would be fun!

SQT -

you realize if we all start posting links Patrick might have to pull the plug on this highly entertaining but fiscally un-lucrative blog?

I pretty much just bookmarked mish and charles hugh smith - they give me plenty of interesting reading as it its...

Micheal,

Happy 40th Birthday. Been there done that...

When you woke up this morning, did you feel different? Did all your hair fall out? Did you suddenly lose your eyesight, sexual function, and are you now incontinent?

My guess is no, at least that was my experience. It' just another day.

My advice.... Live this day as if you will die tomorrow, but plan for tomorrow as if you will live forever.

And that's not just for those turning 40 by the way.

RIC

Michael Holliday-

Happy birthday!

All-
Looks like this "What Now" thread was totally appropriate. More and more of us are running out of patience and feeling shortchanged in general.

Joe Schmoe-
I'm right there with you -- I deferred enjoyment for so long that it became part of my personality. I've never owned a car with air conditioning. Never taken a vacation outside of short 3-4 day trips to places within an 8 hour drive. Always bought the "basic" model of whatever I was buying, be it furniture, clothes, a watch, electronics, etc. It was always save and invest, save and invest. I even exited the stock market before the dotcom crash (even though my portfolio was never tech-heavy in the first place) and waited for the smoke to clear before slowly moving back in. On the surface, it would appear that these were all the right moves. But the New Paradigm kicked my ass and deflated a lifetime of savings into uselessness. I could have paid cash for my (rented) house six years ago with what I have in savings today, but now it's not even enough for a down payment. Things got turned upside down VERY quickly.

HOWEVER, recently I have begun to treat myself, and forced myself to stop scrutinizing every dollar that I spend. "House fund" be damned. I finally decided not to let another year go by without having some fun. I still drive a junker with no air conditioning, but I've consumed a few expensive show tickets and a few nice dinners now -- I finally began to question "what is money for, anyways?" To chase some house that is only going to appreciate faster than I can save up for it? No way. Money is supposed to represent a lot of positive things, and withholding from oneself indefinitely is the surest way to lose sight of that. The last few weeks of threads have made it crystal clear that many of us are starting to get very frustrated. Maybe this single-focus on housing is starting to kill us -- time to diversify a little bit and loosen the purse-strings.

So 2006 isn't going to be a banner year for bubbleheads. 2007 probably won't be a groundbreaker either. As I said before, the ocean liner takes a loooong time to make a u-turn. I think we should admit temporary defeat and dedicate a little time to sushi, prime rib, Bordeaux, trips to Cabo San Lucas, and orchestra seats at the theater. This will clear our heads and return some balance and sanity to our lives.

ric-

"Live this day as if you will die tomorrow, but plan for tomorrow as if you will live forever."

That's our thought for the day.

Ric, Red Whine, thanks for the encouragement.

May your equity grow in perpetuity at the rate of 8-10% year!

LILL,

Mr Lay's demise is a fortuitous event for us all as we will now not need to incur the expense of his incarceration.

It would be justice if his fortune were distributed amongst the employees he stole from to compensate for their lost retirement funds, with payment in relation to the stock they owned at the time of the collapse.

Too bad for his "heirs" as they did nothing but be blood-related to a thief. As for Mr Lay, pine box, a few flowers, and a spot in the debtors graveyard should suffice.

Well guys,

I've been reading this board for over a year now, posting for about 6 months or so. Like many here, I came across this site while searching out information on housing in the midst of a RE transaction (selling, for me). This and other sites helped to convince us to rent for a couple of years before buying again, and I enjoy the conversation on this site in the meantime. The political/religious/philosophical discussions are nice, but at least for me, the most interesting and useful discussions center on housing still, and in particular BA housing. The rants are nice to hear to, mostly because they usually strike a resonant chord with me.

That said, yes, there's a lot of discontent and/or apathy right now on this board, but I do agree that things are changing in the RE scene. Just think back to a year ago - would any realtors admit to a slow market? Would sellers left and right be lowering asking prices? We haven't even begun with ARM resets. Also, no matter what the Fed does, my belief is that mtg rates will go up either way. If the Fed raises rates, variable rates of course go up. If they don't raise rates enough, the bond market will not react favorably, and eventually fixed mtg rates will continue to go up.

Someone a while back proposed that the housing bears risk becoming the "greatest fool" by holding out for a long time, then caving in as the market just starts turning and buying at the start of a long downside. My humble advice is, let's not be that idiot!

Red Whine,

It's interesting, I think half of Gen X locked out of housing has spent the money on travel, entertainment and consumer durables instead... there's a point where there's no point saving a deposit, so you may as well spend whatever you've got on fripperies and wait for the inheritance instead...

Many happy returns of the day, Michael. i haven't hit the big four oh yet, but when it happens i expect the hair to start going in earnest, near blindness, shot libido, probably incontinence and incurable halitosis, so you're probably faring better than that ;)

Thanks Sean!

I am faring a little better than that. Thank G-d...

Happy Birthday, Michael. As a Cancer, do you like big crabs?

http://tinyurl.com/zykw2 - mortgages getting risky: CIBC (Canada)

http://tinyurl.com/jwf8v - Calgary home prices rise 55% in past year

Bubble links with Canadian content. Enjoy!

Comment awaiting moderation? Broken into bite sized pieces:

July 5th, 2006 at 10:01 am
http://tinyurl.com/zykw2 - mortgages getting risky: CIBC (Canada)

Bubble link with Canadian content. Enjoy!

Peter, I gotta say, you have one helluva food obsession. :)

Comment awaiting moderation? Broken into bite sized pieces:

http://tinyurl.com/jwf8v - Calgary home prices rise 55% in past year (Canada)

Bubble link with Canadian content. Enjoy!

Perhaps this explains my relentless urge to BUY, BUY, BUY!

Trust me, the urge is stronger at around 29.5...

I imagine that Surfer-X is one that *bangs the table to be heard*

With a shoe or no shoe...
We will bury you!

LILLL Says:

I’ll just have to remember to step away from falling knives.

Exactly. I think many here come to the blog for confirmation that not buying now is the right thing to do. Hence, when there's an air of discontent and people are disheartened at the slow pace of bubble deflation, this sentiment breeds more discontent in a additive fashion. Besides, true trolls sense uncertainty - otherwise, their posts would get no response.

If you are looking to buy RE in Calfornia, then plan on coming to this blog for updates for at least 3-4 more years. In the meantime, build up your savings. You should be able to get 4.5-5% in a savings or money market account, while my best guess is that homes will be depreciating at a rate of around 10-15%/year for the next few years in some areas. Houses still won't be cheap, but if you have a decent, stable income and fair sized down payment, you should be able to buy something with a manageable mortgage within a few years.

I have an idea for a thread, though... What investment opportunities might we all be missing while waiting for the bubble to burst? Non-dollar denominated bonds? Commodities? Non-USA real estate or stocks? US stocks negatively correlated to the overall market? Anything else? It seems to me that there has to be *some* asset class which will outperform the US dollar over the next few years. Who knows... it may be possible to earn 20-30% on your money while you wait it out, if you are savvy. Or should we all be pursuing a conservative cash preservation strategy? I would love to hear what people are planning on doing with their $ while they wait this thing out...

Not investment advice, of course.

Happy Birthday, Michael! Not too far from the big 4-0 myself.

LILLL said
I passed the big 40 a few years ago and I quite like being on the other side. …Not much difference, really…except that I have a strong sense of what I have and have not accomplished so far in life.
Perhaps this explains my relentless urge to BUY, BUY, BUY

Ughh... I know you were kidding here, but this expresses the very real (and very warped) guiding principle for millions of shallow Boomer materialists.

RE: Ken Lay's death. I feel a bit cheated, too. Kind of like the day I heard about Pol Pot dying of natural causes --while comfortably living under house arrest. Sadly, there is very little karmic justice in the world.

Sadly, there is very little karmic justice in the world.

Perhaps he will reincarnate into a Maine lobster, torn apart and dipped into drawn butter.

There are two reasons why people in America are poor:
1. They are Lazy
2. They are Stupid

Most poor people are both Lazy and Stupid (so are most people that end up filing BK)…

@FAB,

In the past you've made some well argued points and I have found myself agreeing with many of them. However, the above is neither well argued, statistically defensible, nor even jives with common sense. It's just smug elitism and broad-brush generalizing, nothing more. Not even close to 100% of the poor (a.k.a. working class) lazy & unproductive losers, though certainly a sizeable slice fits this description. Nor are 100% of the ruling elite (and their children/heirs) brilliant workaholic visionaries.

Choosing one's parents wisely is hardly a mark of brilliance, nor is the converse a mark of stupidity.

Choosing one’s parents wisely is hardly a mark of brilliance, nor is the converse a mark of stupidity.

How would you know?