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Face Reality

All good points, and one's we think about. Right now we rely on the 401K IRA's and other investments to save for the future. My husband already has six figures saved toward retirement, it may not be seven figures, but it's a start. I simply think that at this time renting is the choice for us. It allows us to have a balanced lifestyle. If we bought all our money would be wrapped up in the house, so we'd be absolutely dependant on an appreciating market to make buying a smart choice. Sacramento is not the BA and I don't believe for a second this market will sustain the gains made in the last few years.

You are right that it would be tough for me to re-enter the workforce, but not impossible. I am college educated, but if really necessary I'll take a less skilled job if it allows us to make ends meet. I was a school teacher prior to having kids. As you already know, teachers don't make the big bucks and day care would have eaten up most of that income anyway. So financially, staying home works.

As far as helping my kids buy a house in the future? The jury's still out on that one. I don't want to raise my kids to expect handouts. If the time comes and the market is still so out of whack that there is no other alternative, then maybe. But my husband and I are doing it ourselves and I'm proud of that.

hesses fan

Thanks for another perspective. It's too easy to forget how good we have it here and how high our expectations are. And there is NO doubt that we have too much litigation.

dear peter,
brazil i s an awsome country. i went to foz de iguazzu.
the water falls and the park is just amazing.

we also went to rio and sao paulo. saw a lot of americans there . rio is very touristy. sao paulo is huge huge metropolis.

brailians are very accepting of other people. they are very beautiful. very simple and spiritual. also lot of problems like drugs and crime and according to brazilians inept police.

most brazilians want to come to usa. they dont speak en glish well. their

What is your trading technique(s)?

I have stopped trading for a while. Only recently I started trading again. I still have huge psychological issues with drawdowns and faith. As a result, I spend time playing around with systems mostly in backtesting.

So I was mostly a trading system junkie. :(

Wayne S., I guess I have put too much focus on futures, which are difficult to scale. Now, I am moving my focus to stocks, hopefully I can manage my psychology better with a diversified portfolio of smaller positions.

Let me know if you want to discuss about trading system ideas.

It's interesting to me that there is this perception that significant savings cannot be accumulated unless you own RE. One of my husband's good friends, who is also a client, has never owned RE and has several hundred thousand saved toward retirement. He's 34 and his wife is 28. They lived in the BA, but now live in Hong Kong. They've never done fancy investing. It's all been through living within their means and conservative investing. All they have to do is continue what they've been doing and they'll have millions when they retire.

One problem with not buying your home is that it’s easy to fall into the trap of thinking that you’re ok with less income. It’s tempting not to work as hard, or to start relying on just one income.

No way. There is a long list of things that I need to achieve.

Face Reality,

You bring up some of the big stressors involved in being a parent today, that's for sure. I agree with Sacto that it is possible to have one parent stay at home and still accumulate significant savings. I think it's becoming harder and harder to do that in the BA though, which explains the flight of so many families to more inexpensive areas.

I have some friends (not BA residents) who are a great example of how to live on one income and still save for their retirement, a future house purchase, and their kids' college. They're *very* careful with their money, living on a strict budget below their means. They buy the kids' toys used at garage sales (toys are crap anyway--mostly a waste of money), some of the kids' clothes at garage sales, they don't eat out a lot (eating out is a huge PITA with small kids anyway, so it's ultimately a waste of money if you're on a budget), and they don't make many frivolous purchases. This might sound like a miserable lifestyle to some people, but they're really quite happy, and they make allowances for occasional vacations, little splurges here and there. To them, having one parent stay at home is more important than having a bunch of new stuff.

As far as the problem of the stay-at-home parent having trouble returning to work after a long absence, there may be obstacles involved, but it's not that big a deal. I know plenty of women who've done it.

Regarding how to accumulate savings without owning real estate, we do it partly by taking what we would be paying into a mortgage and putting the money into savings and conservative investments.

Face Reality

Do you have kids? Kids have had a significant impact on how we live. There will never be a lifestyle, a house or investments that will be worth more to me than being home with the kids. We are planning our retirement, we do hope to own within a few years and believe me, my husband works hard to keep pushing us forward.

It is scary to go to one income, but as you do have the option of going back to work if necessary. I know couples who are totally dependent on two incomes and are screwed if one person loses their job, basically the same boat we're in. My husband has been at his company 10 years, he's on the highest earning team in the N Ca complex and as long as the team does well his job outlook is good. The team has been together for 30+ years, so there's little risk at this time. We've weighed the options and are happy with our choice.

The trick is to make a lot of money from something before it collapses, and it’s always a gamble…

I absolutely agree. The world is changing so quickly. The only way to survive is prudent speculation.

Couples with a $350K income who are forced to work because of extravagant consumption habits can’t be all that common…

Face Reality, I think the people you hang out with are just too reasonable and prudent. ;)

Couples with a $350K income who are forced to work because of extravagant consumption habits can’t be all that common…

I'd say this is a very common phenomenon, regardless of your income bracket. See The Two-Income Trap: tinyurl.com/amuqe

Wayne, I have sent you an email. Please use that address for trading system discussions. :)

The point is that the large number of dual-income families resulted in escalating home prices which in turn forced more couples to become dual-income.

I thought the idea of the book is that the quest for good school districts started this whole cycle.

Anyway, The Two Income Trap describes a nuclear arm race.

Face,

You have a dood point here (have to read that dust jacket more carefully next time) ;-).

The point is that the large number of dual-income families resulted in escalating home prices which in turn forced more couples to become dual-income.

Kind of a catch-22 isn't it? Prices for just about everything today are higher in part because of dual incomes, which is now necessary due to higher prices. Two incomes now = Less economic security than 30 years ago.

Personally, I'd rather eschew "affluenza" and live within or below my means (what was that term from the other thread for this lifestyle?). There are a lot of "necessities" these days that aren't really necessities. People could really get by with much less "stuff" and probably be a lot happier for it.

Meant to say: "Two incomes now = Less economic security than ONE INCOME 30 years ago."

...live within or below my means (what was that term from the other thread for this lifestyle?)

Found it: "Voluntary Simplicity" tinyurl.com/ctlfp

The two-income trap has become a catch-22. But I have to say a lot of people I know that insist they cannot live without the two incomes are really saying they don't want to give up on the lifestyle they are living.

I watched a show (can't remember which one) that followed a couple of two income families to see how they were spending their money and if they really needed two incomes. When the math was all worked out factoring in day care, work wardrobe, gas, lunches and so on, both families were spending more to have the wife work and actually would save money if she stayed at home. The second income has to be fairly substantial to make it worth it. But people are so conditioned to think the second income is necessary they don't bother to look at the alternatives.

That’s part of the story, but the bottom line is that (at least in some areas of the country) two incomes are now needed to have an equivalent lifestyle to what used to be possible with one income, so going back to a single breadwinner model is not sn option in those cases.

One problem is that we are developing an over-capacity in the workforce in the light of globalization. People will soon become a liability to the society. The outlook is quite dim indeed.

When the math was all worked out factoring in day care, work wardrobe, gas, lunches and so on, both families were spending more to have the wife work and actually would save money if she stayed at home. The second income has to be fairly substantial to make it worth it. But people are so conditioned to think the second income is necessary they don’t bother to look at the alternatives.

This is very true. The implicit "tax" for dual-income parents is very high. However, people are driven by perception, not reality.

Another thing is that we are talking about two substantial incomes in the case of the Bay Area. It’s hard to be able to afford to live here otherwise…

Bay area math is a totally different equation. We wouldn't be able to live in SF on one income, but we can choose to live here on one income. I guess that's what it comes down to, it choices. I choose to be with my kids. Yes, teachers get a very good retirement package, but I have the rest of my life to work but only a small window in which to watch my children grow up. We're lucky enough to get health/dental insurance through my husband's work, but that is a good point as well. I know a couple of women who work part time just for the insurance benefits, and I think that is a very good compromise.

I save even more money by not having a wife.

Lol, I won't even comment.

I still don’t see how you can make millions by being frugal and investing a modest disposable income. I’m not saying it’s impossible, just unlikely without some serious luck. The vast majority of people wouldn’t end up with millions even if they took 50% of their salary during their entire working lives and invested it all in some diversified index funds. Even investing their entire salary wouldn’t get most of them into the millions.

It absolutely can be done. I'm not talking tens of millions, but enough to comfortably retire on. My husband's the math guru, but he really did show me how it's possible.

The friend I mentioned that had saved so much also has frugal parents. (from whom he's learned his saving ethic) His father's a retired school teacher and his mom worked for Cal Farm ins before she retired. They lived very frugally most of their lives and were able to pay cash to build their dream house. They now live comfortably with the house paid off, no debt, a teachers pension and enough savings to last them their whole retirement. I don't know that they earned all that much over their whole career's but without investing in anything risky, they have a secure retirement. I'm not saying they're millionaires (I don't know how much they actually have) but they are without fianacial worries. That would be enough for me, I don't need to live an extravagant lifestyle or have a lavish retirement.

So I would suggest that the results from the feminist movement, when analyzed in a logical way, have been far from uniformly positive. I certainly think that women should get equal pay for equal work, but the feminists have created an environment where people (especially women) look down on women that choose to raise their children. Personally, I think everyone has different priorities and political correctness should not get in the way of women pursuing whichever avenue they prefer best.

There is a lot of truth in what you say. Fortunately for me, there is a much broader acceptance of women like me who choose to stay home. I'm encountering more and more stay at home mom's and I think it is such a positive thing. My hope is that my generation is going to start valuing family more and consumption less. But right now it's hard to see that being the case with all the conspicuous consumption going on. Maybe it's the boomers driving the consumerism right now and things will change as they retire, (and dare I say die off) at least I hope so.

Face Reality

I think the key has to do with keeping your money in a combo of stocks/bonds/cash at varying levels and adjusting how much you have in each as the market moves one way or another. The idea is to keep your returns as high yet predictable as possible. I am not an investment advisor (my husband is) so don't take my advise too literally as it loses something in the translation.

Maybe if you’re a sophisticated active investor you can pull it off, but I’m not even sure about that. Mutual fund managers certainly can’t do it.

It is because mutual funds do not engage in active trading. They just buy-and-hope baskets of stocks.

Hey East Bay Renter, thanks for the reminder about that book. I"ve been meaning to read it for a long time and kept forgetting about it. I'm going to buy it this weekend.

That sales are down, but prices are up, simply shows that those who insist on making purchases right now are subscribing to the RE dream.

Slower sales in the lower-end will also cause the median price to go up.

I visited a site which shows what realtors think of the market conditions within their particular area, and I came across this analysis from a realtor regarding the S.F. housing market and thought it was kind of interesting.

"...San Francisco: Median price sales of single family homes, condos & 2-4 unit buildings for the month of August in the City was $820,000 down from $849,000 in July

Nob Hill: The median price sale was $1,307,500 in August compared to $975,000 in July. This is a significant increase which seems to have been caused by a high price sale, $2,895,000, in August.

North Beach: The median price sale was $820,000 in August down from $900,000 in July.

Russian Hill: The median price sale was $1,001,000 in August compared to $800,000 in July. This again is a significant increase which appears to have been caused by a high priced sale, $5,000,000, in August.

Telegraph Hill: The median price sale was $1,860,000 in August compared to $1,300,000 in July. This again was impacted by a larger than normal sale, $4,550,000, in August.

An assessment of the San Francisco market would appear that prices are holding with many areas starting to drop slightly. The increases we have seen appear to have been the result of individual high sales."

Anyway, I thought it was interesting to see how the sale of one or two homes could affect or manipulate the stats of an entire district. Then again, this is the city of San Francisco we're talking about.

Van Kouver

I heard your argument about women in the workplace before, and even though I consider myself an independant woman, well-- it's still hard to argue your points.

I feel that society has actually suffered because of the mass entry of women into the workplace not just economically but socially. Before I had kids I was a school teacher and I saw a lot of kids at loose ends because both parents worked; I knew at that point that once I had kids I would stay home if I could. Fortunately I have been able to do that.

Another social effect has been the rise in divorce. I know a lot of women who would argue that the "old" way of staying home was just making them dependent on the men and staying in marriages only for financial reasons. That may be true to an extent, but I think that women have become so competitive in terms of their careers that they are putting them ahead of marriage and family. I don't see that as a positive side effect. I've also seen women who leave a marriage as soon as it starts to become difficult because it's easier than working it out and since they can support themselves they have no incentive to stay. I think people leave their marriages way to easily anymore.

And of course there is the economic effects. The cost of everything has gone up as a result of the extra money in the household. I also think that the extra income begets more spending on non-essentials and that has contributed to the debtor society we now live in. It's funny, when I was a young woman I assumed I would be the career go getter when I got older, but once I had kids my mindset really changed. I don't regret staying home at all. I don't miss the non-essentials I could have if I worked because the "cost" to my family would be too high.