barbacoa taco said:

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and this is why younger generations get annoyed when boomers say things like "back in my day i bought a house at age 23 during my first job out of college, why can't you?"

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yeah but it was 9.75% for the mortgage for a house cost 10X as much. Those stinking 'Silent Generation' types were just so lucky. They got theirs for only 10K with a mortgage of 2.76%

See how Envy works ?

DEBT

JobSecurity said:

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Probably more like 30k which is feasible if the rest of your expenses are low. To be clear I'm not advocating for this at all but if you were young and had a clear line of sight to higher salaries I don't think it would be impossible. Most people I know stretched for their first home knowing they were early in their careers and had room to grow.

Obviously a different situation for your local diner waitress and her handyman boyfriend who more realistically make up the "average" American household

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His number are off unless a person is saving about 30% to their 401k, but lets call it 60k bring home, after taxes and even just a reasonably decent amount goes to your 401k (still FAR less than you should be saving, mind you).

Even if you had some room to grow, I'd still say it's a terrible financial decision. That would be about 60% of your income. Anything more than 40% is a bad decision and you'll be house poor. 60% is just insanity. And again, assuming zero other debt and nothing else comes up in the next decade before you build up your income more.

It shouldn't just about whether it's technically possible or impossible. That's a really, really low bar to set.

ThunderCougarFalconBird said:

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How are most people able to carry a 400k note at current rates?

ETA I'm not talking about the millionaires here on TexAgs. I'm talking about Joe Sixpack and Jane Boxwine.

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The buy 1940's to 1960's stick builds or mobile homes for less than 150k

El Gallo Blanco said:

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ThunderCougarFalconBird said:

---

How are most people able to carry a 400k note at current rates?

ETA I'm not talking about the millionaires here on TexAgs. I'm talking about Joe Sixpack and Jane Boxwine.

---

I'll be honest, I look around at a lot of middle and lower-middle income folks with 2-4 kids living in $400k homes and driving $80-100k SUV's and super duty trucks and I am wondering how in the hell they are able to make it. Or, how much longer they will be able to live this type of lifestyle.

---

The average person is increasing their debt and financing all of those things. Savings rates now are at one of our lowest points in American history. So contribute minimum to their 401ks and live off financing.

Now, some got lucky and got in their 400k home at 3% just before things took off. That probably helped them. But yes, the car notes are what is more crazy than ever. I have never once in my life bought a new car, and won't ever do so. I haven't had a car payment in 4 years, either.

Sea Speed said:

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I'm not so big on technical analysis, unfortunately. I obviously see the trend and the channel, but don't know what that has to do with rates later this year and you expecting them to be the last chance to refi for a long while. Appreciate your insights as always.

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It's not purely technical. The chart just helps to illustrate the general range and timing I am expecting.



Look back at 2007 and 2008. That was the last time we were in a similar environment. In fact, it was a VERY similar environment. There were inflation fears that forced the FED to raise above 5% and stay there for a year. We even got VERY similar commentary from them in June of 07 as we did this June..

Fed hits the pause button again - Jun. 28, 2007 (cnn.com)

Quote:

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NEW YORK (CNNMoney.com) -- The Federal Reserve left a key short-term interest rate unchanged Thursday and indicated it was still worried about inflation, a sign the central bank will leave rates alone for a while instead of cutting them despite concerns about a sluggish economy.

In its widely watched statement, the Fed eliminated its characterization of core inflation as being "elevated," saying that "readings on core inflation have improved modestly in recent months."

But the Fed added that "a sustained moderation in inflation pressures has yet to be convincingly demonstrated."

---

Key takeaways from the Fed's latest interest rate decision | CNN Business

Quote:

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The Federal Reserve said Wednesday it is keeping its benchmark lending rate at its current level for the seventh time in a row, while signaling fewer rate cuts than previously estimated.

Officials penciled in just one rate cut this year, according to their latest economic projections, compared to the three they forecast in March. They also expect inflation to be more stubborn this year than they thought in the spring, according to their forecasts.

Fed Chair Jerome Powell noted that the May Consumer Price Index, released earlier Wednesday, was "certainly a better inflation report than almost anybody expected." But he said officials still want to see inflation slow further before lowering borrowing costs.

---

I'm not definitively saying we are going to see a historic stock market crash led by the housing market blowing up with the FED injecting historical liquidity over the course of 2 years that drops fedfunds rate to 0, mainly because the FED doesn't have that capability with an absolutely stacked balance sheet already. But when the 2 year and 10 year yiled start dropping fast, it's because the world market is rushing to buy US treasuries as a safe haven. It usually means recession. It's called a bull steepening where short term rates fall faster than long term rates. This is a huge recession warning in the bond world. And while mortgage defaults aren't as big of a threat as they were in 2007, commercial real estate is about to get absolutely rocked and it will bleed into residential. A recession comes with strongly dying off demand. So despite falling rates, nobody is buying. This almost always leads to the FED cutting and cutting more as asset values continue to fall to their eventual bottom. But due to the current economic backdrop, the FED balance sheet, government debt and deficit levels, and currencies like JPY crashing (forcing them to sell their US treasuries into the market for the purpose of raising liquidity to backstop their own currency - at the same time our Treasury department will be isuuing loads of new treasuries (with the FED unable to add significantly to their balance sheet), I think the bottom is much higher than 0% and this all eventually leads to MUCH higher rates in the future as the buyers of treasuries simply wont be willing to buy this much volume without a significalty higher return.

Long story short, this time is starting the same. And it will look the same to a certain point. Then it will start looking much more like the 70's and 80's.

Stat Monitor Repairman said:

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Sea Speed said:

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ThunderCougarFalconBird said:

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How are most people able to carry a 400k note at current rates?

ETA I'm not talking about the millionaires here on TexAgs. I'm talking about Joe Sixpack and Jane Boxwine.

---

I would assume people that want something half decent will have to move to an area like mine. There's a remodeled home with a pool, a shop, an air conditioner gym and 2 apartments for sale in my area for 315k and it's on I think .67 acres. There's plenty more affordable housing, it just isn't in the cool hip areas. Certainly there will have to be a resistance in places like this.

---

Ultimately what it boils down to.

There's plenty affordable houses with land in flyover states but just not in any place that any Gen Zer wants to live.

There's also plenty of high-paid jobs out there that require being away from home for long periods living on rig, ship, barge or man camp, but nobody wants to be away from wifi or Suzie rottencrotch.

---

You pretty much nailed it.

When I moved to Australia in 2007, I reconnected with a childhood friend from Saudi Arabia during a business trip to Perth, Western Australia.

In 2007, Western Australia (dub-a-ewe A) was enjoying the benefits of "the mining boom". Hotel rooms were going for $600/night and there were news stories about the fact that there was such a shortage of drivers that the mines were hiring truck drivers for $140k (sounds like Covid era supply chain demand, huh?).

My mate was talking about how he couldn't hold a steady job and was only making about $30k.

Job possibility #1
I asked him why didn't he pursue one of these truck driver jobs for $140k

His reason - He'd looked into it but the trips took two days and you had to spend one night away from home.

Job possibility #2
Next job - we discussed driving a forklift in a warehouse which he had previously been doing for about $40k.

Problem with keeping that job - they did drug testing and he liked the smokin' the reefer (even fired up a J while I was having a BBQ at his place).

So yeah, a lot of the misery is self-inflicted.

Friend's Housing Solution
He impregnated a girl who had been adopted by Mormons and her Mormon parents gave her a duplex to live in with her two children from a previous relationship. She was about 5'1", 250 lbs and they met online. She was a nice enough gal. I think her best feature was her pierced tongue but... my friend didn't treat her very well so... once their relationship broke up, he had to find a new place to live and that answer was a new girlfriend.

Your posts are always insightful. How do you think prices will do with their being limited supply?

Tex117 said:

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Your posts are always insightful. How do you think prices will do with their being limited supply?

---

Depends on demand. My guess is not well. But it's just a guess. I could see anywhere from a 10%-50% drop. If we enter a full on deleveraging event, it doesn't matter what supply and demand is at. A delveraging is when the value of the dollar increases (which we haven't seen in any of our lifetimes and not since the Great Depression). If the dollar is rising (and please keep in mind, I don't mean in relation to other currencies), it means liquidity is being sucked out of the system which means falling asset prices in relation to the dollar.

If we keep with the trend of devaluing the dollar, it might be a significantly lesser correction as asset values continue to rise in relation to the value of the dollar along with higher inflation. In this case, a drop in demand would still drop prices moderately no matter the supply, but would likely eventually stabilize until a couple years down the road when we enter the next, worse inflection point for the economy.

I really don't see a scenario like 2020 where values rocket for a multi-year period. Rates would have to be at zero and people would have to be flush with cash directly from the government, which I guess is possible. But that would come with such a massive inflation shocks that I simply couldn't advise buying a house in that environment, as, again, we would be right where we are today in a couple years with literally no backstop available and all the room below to fall into depression.

fauxstradamus said:

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I've got some land in smithville. Last few times I've been down there, restaurants keep closing (Honeys, Taco/BBQ place). What's going on there? It used to have some great food. Still love Your Mom's though

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Get ready to be outraged. Word on the street is that Your Mom's is closing as well. Ryan (owner and chef) broke a rib and punctured his lung. They have been closed for a couple weeks now and I heard from a friend they won't reopen.

Honey's closed because they failed health inspections and the owner got a divorce.

Carne Lenta (taco/BBQ place) hired a manager who changed everything for the worse and they lost their customer base.

beerad12man said:

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El Gallo Blanco said:

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ThunderCougarFalconBird said:

---

How are most people able to carry a 400k note at current rates?

ETA I'm not talking about the millionaires here on TexAgs. I'm talking about Joe Sixpack and Jane Boxwine.

---

I'll be honest, I look around at a lot of middle and lower-middle income folks with 2-4 kids living in $400k homes and driving $80-100k SUV's and super duty trucks and I am wondering how in the hell they are able to make it. Or, how much longer they will be able to live this type of lifestyle.

---

The average person is increasing their debt and financing all of those things. Savings rates now are at one of our lowest points in American history. So contribute minimum to their 401ks and live off financing.

Now, some got lucky and got in their 400k home at 3% just before things took off. That probably helped them. But yes, the car notes are what is more crazy than ever. I have never once in my life bought a new car, and won't ever do so. I haven't had a car payment in 4 years, either.

---

If you really want to dumb things down, it's like, on one hand, big things (homes cars etc) are less attainable than ever...while on the other hand, and there is more pressure than ever to attain those things. Materialism and the "keepin up with the joneses" mentality seem to have reached a crescendo in our society and it really could backfire in the next 1-2 years if things don't ease up.

I know a few people who are really struggling and it's like "yeah, you have monthly payments on a $90k F-250 Platinum and $95k Yukon Denali XL, that's a car-combo for rich people".

crowman2010 said:

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tysker said:

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crowman2010 said:

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Large corporations should NOT be able to purchase single family dwellings IMO.

---

But "small" corporations would be ok, right?
Or do you want to completely eliminate the ability for families to rent property under the protection of an LLC?

---

There has to be some sort of cap on it. The ability for these massive corporations to come in, pay straight cash (which artificially inflates prices) and effectively force would-be home owners into only being able to rent is not the direction we should be going.

---

IMHO, M2, FEDFUND, and supply constraints are much more impactful on housing prices than a bunch of wannabe-Blackstone hedge funds buying single-family houses.

I bought my first house with 10% down for 325k in 2012
Sold it for $525k 28 months later 2015

House is now worth somewhere $750-850 ish

Sid Farkas said:

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I can chime in about the California market. Supply is artificially tight due to government regs.

If you own a home, you're golden. If you don't, you're ****ed.

Sacramento is finally figuring it out. Here in Los Angeles the regs are being magically bypassed and high density construction is going up everywhere. My guess is, those will all turn into slums because California govt is so stupid.

---

California has different housing needs due to the permanent renter class.

While I was away in Australia for 12 years, I rented my house out but I intended to move back into it and live there forever (pre California Covid Lockdowns which made that untenable).

I had looked into what you had to do to increase the amount of living space (eventually would need accommodation for guests, or my mother who will probably live well past age 90). My city had a ton of restrictions and it would take years to get plans approved and a building permit.

In The San Fernando Valley, there are a lot of add ons to homes that are not permitted which isn't such a big deal day to day but, it becomes a big deal when you try to sell.

I think it was in 2019, the State of California came over the top of the local cities and said that everybody could build an Additional Dwelling Unit (ADU) on their property.

When I finally sold my house in 2023 and moved to Texas, every potential buyer's first move was to show up with a tape measure and figure out what where they were going to build an ADU. One guy during the showing, started talking about which walls he was going to knock down in order to create more rooms and multiple separate entries to the main house in addition to the ADU he was planning to build. It's a completely different world.

ThunderCougarFalconBird said:

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How are most people able to carry a 400k note at current rates?

ETA I'm not talking about the millionaires here on TexAgs. I'm talking about Joe Sixpack and Jane Boxwine.

---

Remove the coasts and where does the average go? Down, a bit I'd guess.

I posted some information on a thread a few weeks back looking at average income vs average home price and P&I between 1970 and 2024.

On average, most P&I payments were about 30% of your income (before taxes). In 2022-2024 that jumped to 40%.

2% rates and run away spending are killing the middle class family.

C@LAg said:

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ThunderCougarFalconBird said:

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How are most people able to carry a 400k note at current rates?

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we will begin dealing with the effects of that in the not so distant future.

mortgage stimulus checks if you are black, brown, illegal or live X% under some dem-defined economic line.

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As a half brown….how do I take advantage of these mortgage stimulus checks? If you beat em join em right?

A Net Full of Jello said:

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We bought our first house in October of 2011. It was just over 2200 square feet in an Austin suburb and we paid right around $120,000 for it. Today, that home is appraised at $334,425. It went up 277% in 13 years. That's obscene.

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would you be surprised to know the average home priced jumped more from 1980-1990 than 2014-2024? Not much, bud it did based on data I found and posted a few weeks ago (i'll try to find it)

ttu_85 said:

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barbacoa taco said:

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and this is why younger generations get annoyed when boomers say things like "back in my day i bought a house at age 23 during my first job out of college, why can't you?"

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yeah but it was 9.75% for the mortgage for a house cost 10X as much. Those stinking 'Silent Generation' types were just so lucky. They got theirs for only 10K with a mortgage of 2.76%

See how Envy works ?

---

My Silent Generation dad bought a house for $49k in 1979 at some outrageous interest rate. Weren't rates something like 12-18% back then.

But.. he also paid $16k for a top of the line 1979 Cadillac Seville with his Saudi money. That car was awesome.

His biggest miss (IMHO) was not buying a house for $40k in The O.C. in 1974 before we moved to Alaska. His co-workers who did, now have homes worth $1M - $2.5M.

And my Greatest Generation Grandfather - he built his own house in 1953. On weekends, with friends from work. Can you imagine somebody in their late 30s doing that today?

crowman2010 said:

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Aston04 said:

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All I can say is don't move up in house unless 100 percent sure.

The wife pushed hard for us to it just over a year ago- so finally went along.

Even though we could put a ton down, rates our killing us. After mortgage pmt, taxes and insurance, we are at about 3750 a month. We make combined just over 200k - and it's a struggle to stay cash flow positive.

---

You make ~$12,500/mo after taxes and you can't stay cash flow positive? Your issue is not your $3750/mo house payment.

---

$3750 is definitely a huge problem. If you add in maintenance, hoa, etc.. prob averages over 4k a month...

Cars are $1k a month. I will thank God when they are paid off in a two years.. Not selling those for a prob 6-7 years.. We also save for retirement, kids college.. have 4 kids. Grocery costs have skyrocketed. Car insurance has also skyrocketed..

I've taken a hatchet to the budget. No more cable tv. Much reduced eating out, cut down vacation spending (our vacation was just driving to a travel soccer event- not staying on the beach, etc), cut down Amazon spending, just shopped and switched our home/auto insurance, etc...

and we can make it- no doubt... But it's not comfortable like pre- move...

A Net Full of Jello said:

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barbacoa taco said:

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and this is why younger generations get annoyed when boomers say things like "back in my day i bought a house at age 23 during my first job out of college, why can't you?"

---

That is a frustrating thing to hear, for sure, because circumstances are not equal now to how they were when Boomers were in their twenties and thirties. I think that we can all agree, though, that younger millennials and older Gen Zs who are entering the workforce have different priorities than Boomers and even GenXers. They do not remember the years their parents struggle financially and used only one car or two beat up cars, didn't go on nice vacations and would settle for a trip to Six Flags every couple of years, and didn't eat out often at all. They remember the prosperous years and expect to have a similar lifestyle right out of college. And even if they don't consciously realize it, many do prioritize the latest gadgets and toys, evenings out with friends, and fun vacations. They aren't saving for an investing in the future.

---

There is a poster on the entertainment board (the Disney thread) who claims to have spent at least $40K in the last 12 years going to freaking Disney!

Looking at an unplanned move and between home prices and interest rates, it definitely sucks.

We are on the young side to be downsizing, but that's a real possibility.

Bought my house for 120k back in 2015. Mortgage rate at the time was 3.5%. I now owe less than 80k. Montgomery county as my house appraised at 175k.

Aston04 said:

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crowman2010 said:

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Aston04 said:

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All I can say is don't move up in house unless 100 percent sure.

The wife pushed hard for us to it just over a year ago- so finally went along.

Even though we could put a ton down, rates our killing us. After mortgage pmt, taxes and insurance, we are at about 3750 a month. We make combined just over 200k - and it's a struggle to stay cash flow positive.

---

You make ~$12,500/mo after taxes and you can't stay cash flow positive? Your issue is not your $3750/mo house payment.

---

$3750 is definitely a huge problem. If you add in maintenance, hoa, etc.. prob averages over 4k a month...

Cars are $1k a month. I will thank God when they are paid off in a two years.. Not selling those for a prob 6-7 years.. We also save for retirement, kids college.. have 4 kids. Grocery costs have skyrocketed. Car insurance has also skyrocketed..

I've taken a hatchet to the budget. No more cable tv. Much reduced eating out, cut down vacation spending (our vacation was just driving to a travel soccer event- not staying on the beach, etc), cut down Amazon spending, just shopped and switched our home/auto insurance, etc...

and we can make it- no doubt... But it's not comfortable like pre- move...

---

This is the most painful part to me. I do a lot of our shopping and I am just constantly dumbfounded by how much "i'm just gonna run in and get a few things" costs. When we do big shopping, I dread getting rung up...I try to tune it out. Just 2 gallons of mil last night was $10. Just a smal handful of basic items is routinely $30-40.

When you combine inflation with shrinkflation, I really want to know how much more I am paying than just a couple years ago. It does not feel like merely 20-30%, or whatever they say. Feels like my bill has DOUBLED.

Howdy almost neighbor!

Yeah, got my place 8 years ago for $280K, now the county tells me it is worth $640K.

agracer said:

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A Net Full of Jello said:

---

barbacoa taco said:

---

and this is why younger generations get annoyed when boomers say things like "back in my day i bought a house at age 23 during my first job out of college, why can't you?"

---

That is a frustrating thing to hear, for sure, because circumstances are not equal now to how they were when Boomers were in their twenties and thirties. I think that we can all agree, though, that younger millennials and older Gen Zs who are entering the workforce have different priorities than Boomers and even GenXers. They do not remember the years their parents struggle financially and used only one car or two beat up cars, didn't go on nice vacations and would settle for a trip to Six Flags every couple of years, and didn't eat out often at all. They remember the prosperous years and expect to have a similar lifestyle right out of college. And even if they don't consciously realize it, many do prioritize the latest gadgets and toys, evenings out with friends, and fun vacations. They aren't saving for an investing in the future.

---

There is a poster on the entertainment board (the Disney thread) who claims to have spent at least $40K in the last 12 years going to freaking Disney!

---

Not surprised as there's a part of my family that spends an insane amount of $ on Disney. Been to Disney once. I was 8. Done.

LMCane said:

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JobSecurity said:

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ThunderCougarFalconBird said:

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How are most people able to carry a 400k note at current rates?

ETA I'm not talking about the millionaires here on TexAgs. I'm talking about Joe Sixpack and Jane Boxwine.

---

For reference, 400k with 20% down @ 6.75% with 2.2% property tax and average insurance is around ~3000/mo

Definitely tight for an "average" household of 80k but I wouldn't say impossible

---

seriously I can't believe this statement.

$3000 a month = $36,000 a year

Household income of $80,000

after Federal, State, Local taxes, social security and 401K match that is net $43,000

so an entire household is then living on $7000 over 12 months.

so you have a grand total of $627 dollars a month to live on. for car, food, insurance, clothes.

---

80,000 - 401k (6%) - FICA (6.5) = $70,312

Net 43K. = $27k in income taxes

In what world is anyone paying a 40% effective rate on $80k a year?

Also, what banks are loaning $400k to someone who makes $80k/yr? It's not 2007 anymore.

agracer said:

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A Net Full of Jello said:

---

barbacoa taco said:

---

and this is why younger generations get annoyed when boomers say things like "back in my day i bought a house at age 23 during my first job out of college, why can't you?"

---

That is a frustrating thing to hear, for sure, because circumstances are not equal now to how they were when Boomers were in their twenties and thirties. I think that we can all agree, though, that younger millennials and older Gen Zs who are entering the workforce have different priorities than Boomers and even GenXers. They do not remember the years their parents struggle financially and used only one car or two beat up cars, didn't go on nice vacations and would settle for a trip to Six Flags every couple of years, and didn't eat out often at all. They remember the prosperous years and expect to have a similar lifestyle right out of college. And even if they don't consciously realize it, many do prioritize the latest gadgets and toys, evenings out with friends, and fun vacations. They aren't saving for an investing in the future.

---

There is a poster on the entertainment board (the Disney thread) who claims to have spent at least $40K in the last 12 years going to freaking Disney!

---

Funny I think that would be totally worth it.
But I say that as guy that has spent multiples of that to watch Fran, Sherman, Sumlin, and Jimbo achieve mediocrity at Kyle

crowman2010 said:

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tysker said:

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crowman2010 said:

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Large corporations should NOT be able to purchase single family dwellings IMO.

---

But "small" corporations would be ok, right?
Or do you want to completely eliminate the ability for families to rent property under the protection of an LLC?

---

There has to be some sort of cap on it. The ability for these massive corporations to come in, pay straight cash (which artificially inflates prices) and effectively force would-be home owners into only being able to rent is not the direction we should be going.

---

They would just find ways around almost any regulations, but you are right, it does artificially inflate the price of houses. I've seen it in Arizona and Nevada. People from California moved in with a lot of cash from selling their McMansions in California for outrageous prices and found they could get a house in Arizona or Nevada with a Thousand more square foot for half the price of their crappy old 2 bedroom in California. Any price was a steal for them in Arizona or Nevada because it was way more house and even still cheaper than California. So the realtors saw the suckers coming with a lot of cash, and they drove up the prices really quick while the Californians were buying up investment homes.

Here's the US Single Family Home Price since 1965, according to NAR.



But did homes really get that much more valuable? How do we measure the value of a home against a currency that is constantly devalued?

Well.. I like to look at things based on their relationship to Gold. Gold has its own supply and demand, so its not static. But the gold price you see reported is merely its cost in dollars. And we know that we have constantly devalued those over time. So here's the S&P 500 which is representative of the roughly top 500 companies in the economy at all times. We can roughly guage the productivity of the economy by whether the S&P is rising or falling in relation to gold, as it removes the massive manipulation of the dollar from the equation, and there really isn't another store of value in the world that has held its value over time like Gold has.



Now you can clearly see the productivity cycles in our country. And the economy has lost a ton of productivity since 2000, despite the S&P being at record highs. That's what the devalution of the dollar does. The liquidity injected into the system post 2008 did create a more productive economy, but we still aren't back to pre-2000 levels.. not even close, and we might have even topped in 2022 within this trend. Since 2022, gold has been a better place to put your money than the S&P 500.

So now let's look at those housing prices compared to gold.



It's pretty much the same chart as the S&P/GOLD ratio chart. Comparing stocks and housing to a relatively stable store of value like gold instead of a constantly devaluing currency, you actually realize that your house is considerably less valuable today than before the dotcom bust. And there's a risk it can fall further. This means that despite it feeling crazy expensive, if you had your wealth in gold going back to 1968, housing would actually be cheap today relative to $20 years ago. It also tells you that our economy is not very productive and that most of our tailwinds have come on the backs of government stimulus and currency devaluation.

agracer said:

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LMCane said:

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JobSecurity said:

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ThunderCougarFalconBird said:

---

How are most people able to carry a 400k note at current rates?

ETA I'm not talking about the millionaires here on TexAgs. I'm talking about Joe Sixpack and Jane Boxwine.

---

For reference, 400k with 20% down @ 6.75% with 2.2% property tax and average insurance is around ~3000/mo

Definitely tight for an "average" household of 80k but I wouldn't say impossible

---

seriously I can't believe this statement.

$3000 a month = $36,000 a year

Household income of $80,000

after Federal, State, Local taxes, social security and 401K match that is net $43,000

so an entire household is then living on $7000 over 12 months.

so you have a grand total of $627 dollars a month to live on. for car, food, insurance, clothes.

---

80,000 - 401k (6%) - FICA (6.5) = $70,312

Net 43K. = $27k in income taxes

In what world is anyone paying a 40% effective rate on $80k a year?

---

His numbers are off, but 6% 401k is really bad. No one should be saving that little to retirement. It's getting to a point where 15% likely isn't enough. you need to be closer to 25% to retirement to really retire on time and not work until 75. Now, this can include a match, but even if your employer gave 100% up to 6%, that's only 12%. You should be saving at minimum 15% from your own paycheck.

AlphaBean said:

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crowman2010 said:

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Aston04 said:

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All I can say is don't move up in house unless 100 percent sure.

The wife pushed hard for us to it just over a year ago- so finally went along.

Even though we could put a ton down, rates our killing us. After mortgage pmt, taxes and insurance, we are at about 3750 a month. We make combined just over 200k - and it's a struggle to stay cash flow positive.

---

You make ~$12,500/mo after taxes and you can't stay cash flow positive? Your issue is not your $3750/mo house payment.

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You sure about that? Throw in a couple kids and responsibly contributing to retirement and there is not much left.

50k feds gonna take their cut
45k retirement
25.5k childcare (our costs)
45k housing (3750/month all in for this hypothetical)
4.5k Auto insurance (I admittedly don't know if this typical, we have more than just a basic two vehicles on ours so I shaved a chunk off to get to this)
10k Healthcare max OOP because with kids you're gonna need it *looks at 70k bill from 4 days in hospital with 2 in pediatric ICU

That's 180k all in BEFORE incidentals and anything fun or even a reasonable car payment. If you've got cc or SL debt? My goodness. $1,666 for groceries, home and auto maintenance, electricity, fuel…

I know this because we live it. Not our exact numbers but close enough for the point. It is mind boggling to me how a household at our income can feel like we are barely getting by. 4 years ago we did not have to even think about savings. It was just there every month. But I refuse to cut back on retirement. We have cut many, many other things. I do not know how average households are making it.

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You're doing something wrong here.

with just retirement you're income is $155k (didn't subtract Soc Sec) and your Fed Inc Taxes would be closer to $30k. Take all those deductions for child care, etc. and it would be less.

Check your inputs into TurboTax. My wife and I made more than that last year and didn't pay $50k in income taxes + state income taxes

tysker said:

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agracer said:

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A Net Full of Jello said:

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barbacoa taco said:

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and this is why younger generations get annoyed when boomers say things like "back in my day i bought a house at age 23 during my first job out of college, why can't you?"

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That is a frustrating thing to hear, for sure, because circumstances are not equal now to how they were when Boomers were in their twenties and thirties. I think that we can all agree, though, that younger millennials and older Gen Zs who are entering the workforce have different priorities than Boomers and even GenXers. They do not remember the years their parents struggle financially and used only one car or two beat up cars, didn't go on nice vacations and would settle for a trip to Six Flags every couple of years, and didn't eat out often at all. They remember the prosperous years and expect to have a similar lifestyle right out of college. And even if they don't consciously realize it, many do prioritize the latest gadgets and toys, evenings out with friends, and fun vacations. They aren't saving for an investing in the future.

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There is a poster on the entertainment board (the Disney thread) who claims to have spent at least $40K in the last 12 years going to freaking Disney!

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Funny I think that would be totally worth it.
But I say that as guy that has spent multiples of that to watch Fran, Sherman, Sumlin, and Jimbo achieve mediocrity at Kyle

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I'm not saying he's wrong...I get the one big family trip to Disney...but not multiple. That's insane to me.

beerad12man said:

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agracer said:

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LMCane said:

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JobSecurity said:

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ThunderCougarFalconBird said:

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How are most people able to carry a 400k note at current rates?

ETA I'm not talking about the millionaires here on TexAgs. I'm talking about Joe Sixpack and Jane Boxwine.

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For reference, 400k with 20% down @ 6.75% with 2.2% property tax and average insurance is around ~3000/mo

Definitely tight for an "average" household of 80k but I wouldn't say impossible

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seriously I can't believe this statement.

$3000 a month = $36,000 a year

Household income of $80,000

after Federal, State, Local taxes, social security and 401K match that is net $43,000

so an entire household is then living on $7000 over 12 months.

so you have a grand total of $627 dollars a month to live on. for car, food, insurance, clothes.

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80,000 - 401k (6%) - FICA (6.5) = $70,312

Net 43K. = $27k in income taxes

In what world is anyone paying a 40% effective rate on $80k a year?

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His numbers are off, but 6% 401k is really bad. No one should be saving that little to retirement. It's getting to a point where 15% likely isn't enough. you need to be closer to 25% to retirement to really retire on time and not work until 75. Now, this can include a match, but even if your employer gave 100% up to 6%, that's only 12%. You should be saving at minimum 15% from your own paycheck.

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I graduated in 1992. 6% was to get the full match from the company 401K (so saving 10%).

Pick any number you want, anyone paying 40% income tax rates on 80k/yr AND borrowing $400k...well, that's just a disaster waiting to happen.