Ask HN: What is really wrong with the US economy, really?
159 comments
My question is, what is the problem, really
Take a look at Matt Yglesias's The Rent Is Too Damn High (http://www.amazon.com/dp/B0078XGJXO); many "fun" municipalities like Seattle have restricted development to the point that housing is extremely expensive. If you move from Seattle to, say, Houston or Dallas, you'll probably see your effective rent shrink by 35 – 50%.
Secondly: see Tyler Cowen's books The Great Stagnation and Average is Over. Those books are too sophisticated and deep (though they're quite readable) to summarize here, but the shortish version is that Western economies are undergoing a lot of profound shifts driven by a combination of technology and Baumol's cost disease.
in the last couple years have been rent, medical, and dental in that order
Alex Tabarrok's Launching the Innovation Renaissance is also good: regarding medicine and dentistry, part of the issue is Baumol's Cost Disease and part of it is the powerful lobbies that restrict entry into those fields through licensing regimes and other means.
Finally, a general note: be wary of any answers in this thread that don't cite any sources and ideally those sources should be books. The issue is too complex for simple answers, and the simple answers that one tends to hear also tend to be wrong or missing a lot of important information.
Take a look at Matt Yglesias's The Rent Is Too Damn High (http://www.amazon.com/dp/B0078XGJXO); many "fun" municipalities like Seattle have restricted development to the point that housing is extremely expensive. If you move from Seattle to, say, Houston or Dallas, you'll probably see your effective rent shrink by 35 – 50%.
Secondly: see Tyler Cowen's books The Great Stagnation and Average is Over. Those books are too sophisticated and deep (though they're quite readable) to summarize here, but the shortish version is that Western economies are undergoing a lot of profound shifts driven by a combination of technology and Baumol's cost disease.
in the last couple years have been rent, medical, and dental in that order
Alex Tabarrok's Launching the Innovation Renaissance is also good: regarding medicine and dentistry, part of the issue is Baumol's Cost Disease and part of it is the powerful lobbies that restrict entry into those fields through licensing regimes and other means.
Finally, a general note: be wary of any answers in this thread that don't cite any sources and ideally those sources should be books. The issue is too complex for simple answers, and the simple answers that one tends to hear also tend to be wrong or missing a lot of important information.
"If you move from Seattle to, say, Houston or Dallas, you'll probably see your effective rent shrink by 35 – 50%."
Right. If you don't own a car already, you would almost definitely have to, and your job options in the $110k range will put you on an oil rig if you have a master's degree in mechanical engineering, if you can even reach that.
My ex father in law made about $110k at 60 working as a geological consultant for oil companies.
Basically: job opportunities are not the same.
Disclaimer: I am a Texas native. I speak with a lot of knowledge about many municipalities where most of the people I have known in my entire life have lived. Even the rich ones are poor.
Your argument that medical and dental costs would be lower if we didn't restrict entry based on licensing is alarming at the very least. Had I read that first I probably wouldn't have responded, but I've already typed, so, bleh.
Right. If you don't own a car already, you would almost definitely have to, and your job options in the $110k range will put you on an oil rig if you have a master's degree in mechanical engineering, if you can even reach that.
My ex father in law made about $110k at 60 working as a geological consultant for oil companies.
Basically: job opportunities are not the same.
Disclaimer: I am a Texas native. I speak with a lot of knowledge about many municipalities where most of the people I have known in my entire life have lived. Even the rich ones are poor.
Your argument that medical and dental costs would be lower if we didn't restrict entry based on licensing is alarming at the very least. Had I read that first I probably wouldn't have responded, but I've already typed, so, bleh.
I don't know why pushing back on licensing requirements invented last century is alarming. We already see it with the rise of PAs and nurse practitioners. People who aren't doctors are prescribing medications and performing routine procedures.
Also, making $110k in Texas as software engineer is very doable without working on an oil rig. Of course, salaries vary a lot when you start factoring in benefits like healthcare and 401k matching.
Also, making $110k in Texas as software engineer is very doable without working on an oil rig. Of course, salaries vary a lot when you start factoring in benefits like healthcare and 401k matching.
I agree, the issues are quite complex. I cited a fed paper in my reply below -- thanks for taking the discussion up a notch.
Something I'd like to understand better is why capital (and not labor) is capturing a higher share of firms' overall income than in past years. As I noted in my reply, the decline of savings means this is a double-whammy for people, as they get hit on the front end with lower upfront cash payments, and on the back as well, when they don't share in any upside of corporate profits, due to no share ownership.
Something I'd like to understand better is why capital (and not labor) is capturing a higher share of firms' overall income than in past years. As I noted in my reply, the decline of savings means this is a double-whammy for people, as they get hit on the front end with lower upfront cash payments, and on the back as well, when they don't share in any upside of corporate profits, due to no share ownership.
I can't footnote this ( although look a lot to both Tyler Cowen and Arnold Kling ) , but labor is relatively less mobile than capital. Capital has become more mobile.
Actual capital - machinery - has taken it as hard as has labor. This leads many to think that the increases may be closer to rents than profits. It's also harder to say what the effect of online is; for people under ... what, 25-30?, "likes" on the Internet act as a form of currency that may verge on real currency at the edges.
Actual capital - machinery - has taken it as hard as has labor. This leads many to think that the increases may be closer to rents than profits. It's also harder to say what the effect of online is; for people under ... what, 25-30?, "likes" on the Internet act as a form of currency that may verge on real currency at the edges.
What'd your great grandparents do for entertainment? Probably the radio, some TV, read some books, play cards. Speaking of TV, how'd they get it? Most likely over the air. Phone? Yeah, they had a land line, but they weren't dropping $100+ for a cell phone. Internet? Of course not. House? Probably about 1200 square feet or so, and they likely had more than 3 kids to occupy it. The rest of the world? A recovering war-torn mess that needed to rebuild itself before it could even start to compete with the US economically. What about the car? They probably had one or two, but you could fix them without needing specialized gear.
What about the food they ate? It was likely whole foods, which would lead to lower rates of heart disease and obesity. And if they lived in a rural area or subdivision, they likely grew some of their own or bought it from local farmers.
My grandparents never borrowed a dime from a bank. They owned a house, two vehicles, and raised 5 children. Their vacation was a week every summer at a rental cabin about 3 hours away. They didn't get cable until the mid 90s and never got the internet or a cell phone. How much money could you save if you never owed anyone interest and spent 20 dollars a month for communication?
What about the food they ate? It was likely whole foods, which would lead to lower rates of heart disease and obesity. And if they lived in a rural area or subdivision, they likely grew some of their own or bought it from local farmers.
My grandparents never borrowed a dime from a bank. They owned a house, two vehicles, and raised 5 children. Their vacation was a week every summer at a rental cabin about 3 hours away. They didn't get cable until the mid 90s and never got the internet or a cell phone. How much money could you save if you never owed anyone interest and spent 20 dollars a month for communication?
I think if you list cell phones and the internet before you list housing, your sense of scale is completely off.
Even if somebody's spending $200/mo on telephone and internet connectivity, that still pales in comparison to the cost of rent in pretty much any part of the country. A fairly small studio apartment in the area where I live is approaching $2000/mo, minimum - to pay less than that I'd probably have to move 30+ miles away, which then increases my commuting costs dramatically and might force me to drive instead of take public transit. (And no, I'm not living in some posh downtown area with high demand, I'm living next to the low-income workers and big families, in an apartment complex built in the 70s or 80s.)
Then let's look at health and dental costs, which combined together probably are double/triple what you pay combined for reasonable cell phone/internet service. (Personally, I pay $30/mo for cell phone voice and data. Internet is expensive because yay, monopolies - very little choice there.) Going without phone/internet connectivity in this modern society is utterly ridiculous as a working professional; you simply can't get away with it unless you decide you're gonna cut yourself off from the world and live in a cabin somewhere.
To answer your specific question, let's say he spends $200/mo on internet+cell phone. If he cuts those out entirely, that's $2400/yr, or barely a month's rent in many localities.
Don't be ridiculous. Stop focusing on tiny things when the real problems are right in front of you: Housing costs, health costs, transit costs...
Even if somebody's spending $200/mo on telephone and internet connectivity, that still pales in comparison to the cost of rent in pretty much any part of the country. A fairly small studio apartment in the area where I live is approaching $2000/mo, minimum - to pay less than that I'd probably have to move 30+ miles away, which then increases my commuting costs dramatically and might force me to drive instead of take public transit. (And no, I'm not living in some posh downtown area with high demand, I'm living next to the low-income workers and big families, in an apartment complex built in the 70s or 80s.)
Then let's look at health and dental costs, which combined together probably are double/triple what you pay combined for reasonable cell phone/internet service. (Personally, I pay $30/mo for cell phone voice and data. Internet is expensive because yay, monopolies - very little choice there.) Going without phone/internet connectivity in this modern society is utterly ridiculous as a working professional; you simply can't get away with it unless you decide you're gonna cut yourself off from the world and live in a cabin somewhere.
To answer your specific question, let's say he spends $200/mo on internet+cell phone. If he cuts those out entirely, that's $2400/yr, or barely a month's rent in many localities.
Don't be ridiculous. Stop focusing on tiny things when the real problems are right in front of you: Housing costs, health costs, transit costs...
> A fairly small studio apartment in the area where I live is approaching $2000/mo, minimum
Unless you live in NY, SF (/me waves!), or DC, that number is grossly out of touch with the actual costs of rent in the United States.
Unless you live in NY, SF (/me waves!), or DC, that number is grossly out of touch with the actual costs of rent in the United States.
http://priceonomics.com/the-rise-of-bay-area-rent-prices/
This is from 2013. It hasn't gotten better. Their median for the city I live in is $2395 (and for reference, I'm an hour+ drive from San Francisco; ~2 hours by train).
Rents around me have definitely been going up, even if they're not at $2400. And that's for studios/1 bedrooms. If I were to move into the exact apartment I have now, the rent on the lease would be a few hundred dollars more than what I'm already paying (despite the fact that they've been bumping my rent up as much as they can).
Yes, there are low-rent areas. But a lot of people don't have the option to live in them.
This is from 2013. It hasn't gotten better. Their median for the city I live in is $2395 (and for reference, I'm an hour+ drive from San Francisco; ~2 hours by train).
Rents around me have definitely been going up, even if they're not at $2400. And that's for studios/1 bedrooms. If I were to move into the exact apartment I have now, the rent on the lease would be a few hundred dollars more than what I'm already paying (despite the fact that they've been bumping my rent up as much as they can).
Yes, there are low-rent areas. But a lot of people don't have the option to live in them.
When I said "NY, SF, DC" I meant the metro areas, not the cities.
My friend is fond of telling me I could get a sweet 1000sqft loft in downtown Houston for $1200/mo or so. Or a regular apartment for half that.
Of course, to me, not living in Texas is worth the extra thousand dollars a month
My friend is fond of telling me I could get a sweet 1000sqft loft in downtown Houston for $1200/mo or so. Or a regular apartment for half that.
Of course, to me, not living in Texas is worth the extra thousand dollars a month
Even for DC that's deeply out of touch. I spent about two minutes on apartments.com and found a building in Arlington, nice neighborhood and right on two Metro lines, with studios for $1200/month. $2000/month can get you two bedrooms with a balcony and about 900 ft^2.
I get the feeling that people are confusing the rents in extremely desirable neighborhoods with the rents you must pay to be in the city at all.
I get the feeling that people are confusing the rents in extremely desirable neighborhoods with the rents you must pay to be in the city at all.
You can rent a 2 bedroom apartment in most cities for under 900 a month. Spending money for internet + cell + cable entertainment can approach half that. With the median income in the US being $51K, that's about 6-8% of pre-tax income going towards entertainment, not counting eating out, vacations, and movies.
Your local rental costs are whack, and not representative of most of the country.
They don't need to be representative of the entire US. We know where he lives, and I know what the layout of that area is like. If his job is in Seattle he doesn't have access to many low-rent housing options and the same is true for many other people in that area.
You said:
that still pales in comparison to the cost of rent in pretty much any part of the country.
Do you actually know what the cost of rent is in the rest of the country? Not long ago I paid $450/mo to split a 3br apartment with two friends in a moderate town 1 hour from a major city. Compared to that, $200/month on connectivity is indeed quite a lot.
that still pales in comparison to the cost of rent in pretty much any part of the country.
Do you actually know what the cost of rent is in the rest of the country? Not long ago I paid $450/mo to split a 3br apartment with two friends in a moderate town 1 hour from a major city. Compared to that, $200/month on connectivity is indeed quite a lot.
I will agree that sharing larger accommodations (3br, 4br, etc) is a great way to cut costs, and that housing is much cheaper in other parts of the country.
Will you still argue that housing + health care don't dwarf most other expenses? Cost of living is a sum of costs, not just the cost of rent or the cost of health care. That sum keeps going up.
Also, for many people sharing a big apartment/house is simply not an issue - having kids, having health issues, or a simple lack of available large housing. I've definitely shared places here in the past to cut costs, but that comes with all sorts of hidden costs built into it, and it's riskier.
Living 1 hour from a major city already imposes significant costs. I hope you're not an hour from the nearest hospital or fire station (I used to live that far from the nearest hospital, in an area with no fire coverage. Not the greatest...)
Will you still argue that housing + health care don't dwarf most other expenses? Cost of living is a sum of costs, not just the cost of rent or the cost of health care. That sum keeps going up.
Also, for many people sharing a big apartment/house is simply not an issue - having kids, having health issues, or a simple lack of available large housing. I've definitely shared places here in the past to cut costs, but that comes with all sorts of hidden costs built into it, and it's riskier.
Living 1 hour from a major city already imposes significant costs. I hope you're not an hour from the nearest hospital or fire station (I used to live that far from the nearest hospital, in an area with no fire coverage. Not the greatest...)
Housing & health care are indeed the greatest costs, I'm just arguing that other costs are usually not so small in comparison that they can be waived in this discussion as negligible. If you rent a studio for $800 (as you could in this town), cutting your communication costs by $100-200 yield a moderate but real impact.
I don't mean I live in the middle of nowhere and commute to the city, I mean it's a satellite town of the variety you often find near large cities (To give you an idea). 150,000 people, and I live 200 yards from one of many fire stations.
I don't mean I live in the middle of nowhere and commute to the city, I mean it's a satellite town of the variety you often find near large cities (To give you an idea). 150,000 people, and I live 200 yards from one of many fire stations.
I guess my PoV is that saving $2k+ a year is nice, but not significant if that's still only ~2 months rent. It's better - much better than it being 1 month's rent - but to me, you have to focus on the expenses that are the biggest and are most likely to grow. You can definitely save a lot of money by chipping away at the tinier stuff, but if that's not growing, I'm not sure it buys you much.
I suppose from another point of view, it's better to start with the small things you have control over, and make some tiny but measurable improvements, so you don't despair at how big everything is. That's fair.
I suppose from another point of view, it's better to start with the small things you have control over, and make some tiny but measurable improvements, so you don't despair at how big everything is. That's fair.
The post-war expansion was terribly inefficient. And a lot of what was defined as an increase in quality of life two generations ago (pave everything!) turns out to look like a decrease in quality of life to our generation (suburban sprawl).
If you analyze the ongoing costs of maintaining our urban environment, vs paving everything in the first place, you see that it's easy to pave more than you can afford to maintain. That's us, and it's not just pavement, it's a whole lot of things.
I like this blog / podcast for talking about how we can avoid making decisions like the ones that got us here: http://www.strongtowns.org/
If you analyze the ongoing costs of maintaining our urban environment, vs paving everything in the first place, you see that it's easy to pave more than you can afford to maintain. That's us, and it's not just pavement, it's a whole lot of things.
I like this blog / podcast for talking about how we can avoid making decisions like the ones that got us here: http://www.strongtowns.org/
I would say that the USA economy does not seem so bad right now because of Quantitative easing: a few trillion $$ in the last several years of new money created out of nothing. This has maneuvered housing and stock prices up, fueling a false sense of optimism and more consumer spending.
Long term, we have huge problems in my opinion. Our profligate military spending is going to catch up with us. If we are able to redirect our offshore military spending soon, things might be OK, but I am not hopeful.
Edit: I forgot to give my advice: don't get caught up in consumerism (stop watching TV commercials, don't get a new car every time your brother in law does, etc.). Try to save some of your after tax income. Invest time (and money if needed) in continuing education over your entire life.
Long term, we have huge problems in my opinion. Our profligate military spending is going to catch up with us. If we are able to redirect our offshore military spending soon, things might be OK, but I am not hopeful.
Edit: I forgot to give my advice: don't get caught up in consumerism (stop watching TV commercials, don't get a new car every time your brother in law does, etc.). Try to save some of your after tax income. Invest time (and money if needed) in continuing education over your entire life.
What about spending on healthcare and pensions? We spend more on each of those than on our military.
Good point Julian. Spending on healthcare, repairing infrastructure, cost of food stamps, etc. pores money back into our general economy, something that spending money on foreign bases, etc. does not.
One thing: it is very important to wind down the size of our military very slowly because we have made a commitment to supply jobs long term in return for being in the military and the sacrifices that entails. My solution is to bring most service people stationed overseas home as soon as we can manage that - better to spend the money inside the USA while maintaining our employment commitments to people in our military services.
One thing: it is very important to wind down the size of our military very slowly because we have made a commitment to supply jobs long term in return for being in the military and the sacrifices that entails. My solution is to bring most service people stationed overseas home as soon as we can manage that - better to spend the money inside the USA while maintaining our employment commitments to people in our military services.
Interesting to think a factor could be my grandparents still living their piece of the American Dream.
I recently moved to US (from India) and I was shocked to see how the "free market" economy is structured to bankrupt the middle class and poor. Indians have far less income than Americans but are somehow able to save more.
Here are some basic problems I see with economy:
1) Rent: When people are paying half their paycheck to rent a studio apartment, there is something seriously wrong. The monthly rent in most areas is more than 1% of the property value, which is insane. Why pay $2,000 per month to rent, when you can buy it for $1,500 per month mortgage which won't increase every year and will build value towards your equity. In India, most people own houses or spend around 10% to 20% for rent; despite the property being far expensive than US. Example: it costs $500k to $1 million to buy a 2 bedroom apartment in Delhi, but you can rent it for $600 to $1,200.
2) Healthcare: Our healthcare expense in India was less than $500 per year (without insurance). It is more than $20,000 in US, and we are still held hostage by medical practices and insurance companies. Examples: wait 3 weeks to schedule an appointment with your doctor; $this is not covered by your insurance; pre-existing conditions.
The drugs I bought in India for $10, costs $200 in US; there are drugs created by Indian pharmaceutical companies and sold to US pharmacies for $1 (they still make good profit on it), but it is sold for $100 in US. The prices are artificially inflated so high that it is not affordable by 99%, so they are forced to buy insurance. This isn't free market economy, this is extortion by monopoly; there should be no place for middle man in healthcare.
3) Banks are designed to screw consumers in every possible way and suck every penny out of your account. It's is not much different in India; just the amounts are lower and banks are regulated by Government.
3) Service & Utility companies: most people pay around $100 per month phone and $100 per month for cable. In India it costs $5 per month for cable, and most people pay between $5 to $15 for phone. Moreover, there are no draconian contracts and service is much better; phones work in remote villages and even in lower basement of concrete buildings. It is silly how a company's 'Terms of Service' can hold consumers hostage and even super seed the law.
4) Consumerism: Americans are obsessed with credit cards and buying everything they can't afford. Why does a minimum wage worker spend $100 a month to buy an iPhone when there are prepaid Android alternatives available for much less? Why do people making $30,000 to $40,000 buy BMWs and $2,000 purses?
Here are some basic problems I see with economy:
1) Rent: When people are paying half their paycheck to rent a studio apartment, there is something seriously wrong. The monthly rent in most areas is more than 1% of the property value, which is insane. Why pay $2,000 per month to rent, when you can buy it for $1,500 per month mortgage which won't increase every year and will build value towards your equity. In India, most people own houses or spend around 10% to 20% for rent; despite the property being far expensive than US. Example: it costs $500k to $1 million to buy a 2 bedroom apartment in Delhi, but you can rent it for $600 to $1,200.
2) Healthcare: Our healthcare expense in India was less than $500 per year (without insurance). It is more than $20,000 in US, and we are still held hostage by medical practices and insurance companies. Examples: wait 3 weeks to schedule an appointment with your doctor; $this is not covered by your insurance; pre-existing conditions.
The drugs I bought in India for $10, costs $200 in US; there are drugs created by Indian pharmaceutical companies and sold to US pharmacies for $1 (they still make good profit on it), but it is sold for $100 in US. The prices are artificially inflated so high that it is not affordable by 99%, so they are forced to buy insurance. This isn't free market economy, this is extortion by monopoly; there should be no place for middle man in healthcare.
3) Banks are designed to screw consumers in every possible way and suck every penny out of your account. It's is not much different in India; just the amounts are lower and banks are regulated by Government.
3) Service & Utility companies: most people pay around $100 per month phone and $100 per month for cable. In India it costs $5 per month for cable, and most people pay between $5 to $15 for phone. Moreover, there are no draconian contracts and service is much better; phones work in remote villages and even in lower basement of concrete buildings. It is silly how a company's 'Terms of Service' can hold consumers hostage and even super seed the law.
4) Consumerism: Americans are obsessed with credit cards and buying everything they can't afford. Why does a minimum wage worker spend $100 a month to buy an iPhone when there are prepaid Android alternatives available for much less? Why do people making $30,000 to $40,000 buy BMWs and $2,000 purses?
1) Those are false choices. If rent is $2,000/month, a mortgage would be far more than $1,500. Just an example, my rent is near $2k in SF, an equivalent sized unit on my block just sold for $700k. If you could put 20% down (just save $140,000!), a 30-year mortgage would be $3,500/month -- 75% more than renting.
2) Get a new healthcare plan through Healthcare.gov. The out-of-pocket maximum is $12,700 for a family plan.
3) Find a credit union, no fees, no shenanigans.
4) Call around and get a deal, my phone plan is $65/month and my cable (25mb internet + digital 'starter' TV) is $65/month
5) Agreed.
2) Get a new healthcare plan through Healthcare.gov. The out-of-pocket maximum is $12,700 for a family plan.
3) Find a credit union, no fees, no shenanigans.
4) Call around and get a deal, my phone plan is $65/month and my cable (25mb internet + digital 'starter' TV) is $65/month
5) Agreed.
1) My uncle lives in a suburb in New York. He was paying $900 per month to rent a small 2 bedroom apartment. He bought a 3 bedroom house for $130,000; it is much bigger, nicer and monthly payment (including taxes and insurance) is less than his previous apartment. Moreover, he is not just giving that money away; it is contributing towards the equity. At some point, he will have no rent and own the house out right.
2) How about the cost of Insurance? Let's add that to the expenses as well. Thanks to Obamacare, we are now able to get healthcare; Insurance company previously denied our treatment due to pre-existing condition despite charging $1,500 per month.
3) I am exploring that option, but most people still use big banks.
4) Of course, I got deals. I own my phone outright, and pay $50 per month for pre-paid data plan. My 50 mbps internet + digital TV (mid-package) is $55 per month. No contracts. But most people are still paying $100 for phone and $100 for cable.
2) How about the cost of Insurance? Let's add that to the expenses as well. Thanks to Obamacare, we are now able to get healthcare; Insurance company previously denied our treatment due to pre-existing condition despite charging $1,500 per month.
3) I am exploring that option, but most people still use big banks.
4) Of course, I got deals. I own my phone outright, and pay $50 per month for pre-paid data plan. My 50 mbps internet + digital TV (mid-package) is $55 per month. No contracts. But most people are still paying $100 for phone and $100 for cable.
> If rent is $2,000/month, a mortgage would be far more than that
Typically, the rent is covering an existing mortgage + taxes + insurance + maintenance + profit. If the mortgage were higher than the rent, the building owner wouldn't be making any money renting it out.
Typically, the rent is covering an existing mortgage + taxes + insurance + maintenance + profit. If the mortgage were higher than the rent, the building owner wouldn't be making any money renting it out.
No, it doesn't work like that, because it doesn't take the house's capital gain into account.
Given the ability to grow the housing supply, there is typically a fixed return for a property. That return will be split between capital gain and rent. Rent no longer covers the mortgage because it is the total return that determines if it is a good investment. There are also the tax benefits of renting out a house in some locations (maintenance and insurance would be deductible).
When we rented out our house, we were told that the typical return on capital was 8%, where 2-3% would be capital gain, and the rest in rent. We priced our rent at 5% to get a quick rental. Mortgage rates in that location are 6%.
If it is hard to gather a down payment, then rents can exceed mortgages because renters cannot easily swap between the two.
Given the ability to grow the housing supply, there is typically a fixed return for a property. That return will be split between capital gain and rent. Rent no longer covers the mortgage because it is the total return that determines if it is a good investment. There are also the tax benefits of renting out a house in some locations (maintenance and insurance would be deductible).
When we rented out our house, we were told that the typical return on capital was 8%, where 2-3% would be capital gain, and the rest in rent. We priced our rent at 5% to get a quick rental. Mortgage rates in that location are 6%.
If it is hard to gather a down payment, then rents can exceed mortgages because renters cannot easily swap between the two.
Admittedly, lessons from the SF housing market aren't broadly applicable, but due to rent control, the booming home prices, and bizarre property tax rules, it's much cheaper to rent.
And they aren't always making money. Its about investment.
> 4) Call around and get a deal, my phone plan is $65/month
Which provider are you with?
Which provider are you with?
You can get a phone plan for $10/month (unlimited talk and text no internet though) and $25/month(unlimited talk, text and data) from Republic wireless. Only caveat is, the plan is limited to android and you have to buy the phone for $299.00 upfront.
That is a Sprint plan, they've been trying to wean people off the discounted rates, but many companies give fairly significant discounts. I think I'm on a 25% discount currently through my girlfriend's place of business.
I'll start by saying that I feel your pain. I've had lots of discussions with friends where we expressed the belief that we all thought we'd be financially comfortable by now. Almost none of us are.
Some thoughts on both sides of this: 1 - My grandparents lost it all in the Great Depression. My parents never had enough money to take overseas vacation once the kids were born. They were never comfortable. This isn't unique to our generation.
2 - We have a lot of material gains that aren't factored into the equation. (Free internet, etc) But this is forcing us to compare against others a lot more. We only see the people succeeding, and don't count the failures.
3 - Once you discount the effects of obesity, we are a much healthier generation than our parents and grandparents. Think of all the major diseases (polio, flu) that used to be fatal.
4 - For better or worse, there is a "Winner takes all" mentality in the current environment. Globalization plus Technology means the best get paid disproportionally more than in prior generations. Upper Middle Class is getting squeezed. The "winners" are now earning a lot more, and are a lot more visible.
5 - In today's environment, losing a job costs A TON and is incredibly destabilizing.
I don't know what advice to give, other than don't get sucked in to the consumerism, or feeling forced to keep up with everyone else.
Some thoughts on both sides of this: 1 - My grandparents lost it all in the Great Depression. My parents never had enough money to take overseas vacation once the kids were born. They were never comfortable. This isn't unique to our generation.
2 - We have a lot of material gains that aren't factored into the equation. (Free internet, etc) But this is forcing us to compare against others a lot more. We only see the people succeeding, and don't count the failures.
3 - Once you discount the effects of obesity, we are a much healthier generation than our parents and grandparents. Think of all the major diseases (polio, flu) that used to be fatal.
4 - For better or worse, there is a "Winner takes all" mentality in the current environment. Globalization plus Technology means the best get paid disproportionally more than in prior generations. Upper Middle Class is getting squeezed. The "winners" are now earning a lot more, and are a lot more visible.
5 - In today's environment, losing a job costs A TON and is incredibly destabilizing.
I don't know what advice to give, other than don't get sucked in to the consumerism, or feeling forced to keep up with everyone else.
I'm not sure if I agree that your grandparents were under less pressure in their jobs. Overall, I think life is far easier today than it was 50 years ago, at least for most workers.
It sounds like you're doing better than 99% of people. Six figure income, no huge expenses. I think the question isn't 'what's the problem with the economy' - really the question should be 'what's the problem with our expectations?'
I think for all of human history the Joneses have looked more financially comfortable and happy than they really are. Perhaps the comfortable people you envy are not as comfortable as they appear. Or maybe comfort is more a state of mind than a state of finance.
Those are my two cents, at least. I'd be happy to hear more about your situation and where you're coming from.
It sounds like you're doing better than 99% of people. Six figure income, no huge expenses. I think the question isn't 'what's the problem with the economy' - really the question should be 'what's the problem with our expectations?'
I think for all of human history the Joneses have looked more financially comfortable and happy than they really are. Perhaps the comfortable people you envy are not as comfortable as they appear. Or maybe comfort is more a state of mind than a state of finance.
Those are my two cents, at least. I'd be happy to hear more about your situation and where you're coming from.
> Life is far easier today than it was 50 years ago, at least for most workers.
Whenever I find myself following the line of thinking that OP put forward, I try and remember: I'm the first generation in my family to be able to rely on the fact that any place I'm in (read: my car and my personal residence) has air conditioning
Whenever I find myself following the line of thinking that OP put forward, I try and remember: I'm the first generation in my family to be able to rely on the fact that any place I'm in (read: my car and my personal residence) has air conditioning
He made it clear he's not complaining about his situation and is asking about others', in general - or more precisely, 'My situation is fairly okay, but why isn't it great on my income? Why do other people have it so much worse when it seems like they should be okay?'
Sorry, I didn't mean to accuse him of complaining. It's a perfectly fair question - if $100k income is not enough to cause happiness, then what is? I suspect that even $1 million might not be enough to cause happiness. Or even $10 million. I remember reading that income stops being a predictor of happiness after around $75k per year. Here is the first source I googled: http://www.inc.com/news/articles/2010/09/study-says-$75,000-...
Even though it seems like money reduces hardship and should increase happiness, I think as long as you aren't broke, relationships matter more than bank accounts.
What do you think?
Even though it seems like money reduces hardship and should increase happiness, I think as long as you aren't broke, relationships matter more than bank accounts.
What do you think?
I agree completely. To me, the most concerning question is whether eventually, his $110k income won't even be enough for the essentials - housing, health care, taxes, food, etc. Costs keep going up; will they stop? Will his income go up automatically? Where's the money going to come from? Most of the profits and growth in this economy seem to be going to people who are already rich, while jobs keep evaporating.
Things sound like they're OK for the OP right now, and he doesn't sound incredibly troubled, just perturbed. And that's probably the right point of view; no use freaking out. But I genuinely worry for a big chunk of the US - people my age and younger - because I don't know if they'll be able to afford anything, or get jobs, 10 years from now.
Once you're able to pay your expenses and put enough money away to have piece of mind, I think the intangible things matter most. If all my friends have to move into the wilderness to afford their rent, though, I'm gonna be pretty lonely :)
Things sound like they're OK for the OP right now, and he doesn't sound incredibly troubled, just perturbed. And that's probably the right point of view; no use freaking out. But I genuinely worry for a big chunk of the US - people my age and younger - because I don't know if they'll be able to afford anything, or get jobs, 10 years from now.
Once you're able to pay your expenses and put enough money away to have piece of mind, I think the intangible things matter most. If all my friends have to move into the wilderness to afford their rent, though, I'm gonna be pretty lonely :)
Well, I can't really know my grandparents' state of mind. But my grandfather drove trucks locally, and my grandmother worked in a supermarket. Try to imagine affording a single family house and two cars with jobs like that today. They always seemed like they enjoyed their jobs. My grandfather kept working long after retirement age. I never heard them complain about their jobs or give any indication they didn't like them.
If 99% of people are worse off than I am, that seems like an extremely serious problem to me. Hence my question.
If 99% of people are worse off than I am, that seems like an extremely serious problem to me. Hence my question.
Thanks for your reply.
Maybe it has to do with WWII. After WWII, the US was the only great economic power left undamaged. Our industries supplied the world, and they boomed. That wealth trickled down to many people in the US. Now, decades after WWII, other countries around the world have developed their own industry, driving down global prices and wages. As a result, perhaps the average global worker is better off, but the average US worker is worse off. This may partly explain why median wages have been stagnant in the US since 1974ish.
I wonder how much of comfort is attitude or perspective. I also happen to be a single man living in a high-rent city (Palo Alto). My income is about $30,000. Rent is my largest expense by far, but overall I feel quite comfortable. I manage to contribute $5k each January to my Roth IRA. No doubt if I had children or medical expenses, my $30,000 income would be strained, but right now I feel relatively comfortable on it. My needs are met.
Maybe it has to do with WWII. After WWII, the US was the only great economic power left undamaged. Our industries supplied the world, and they boomed. That wealth trickled down to many people in the US. Now, decades after WWII, other countries around the world have developed their own industry, driving down global prices and wages. As a result, perhaps the average global worker is better off, but the average US worker is worse off. This may partly explain why median wages have been stagnant in the US since 1974ish.
I wonder how much of comfort is attitude or perspective. I also happen to be a single man living in a high-rent city (Palo Alto). My income is about $30,000. Rent is my largest expense by far, but overall I feel quite comfortable. I manage to contribute $5k each January to my Roth IRA. No doubt if I had children or medical expenses, my $30,000 income would be strained, but right now I feel relatively comfortable on it. My needs are met.
> I wonder how much of comfort is attitude or perspective. I also happen to be a single man living in a high-rent city (Palo Alto). My income is about $30,000.
I live in a shitty small apartment in a run down part of SF, and my annual rent is $20,000. Either you're talking net income, PA is way cheaper than I've been led to believe, or there's some factor I'm missing
I live in a shitty small apartment in a run down part of SF, and my annual rent is $20,000. Either you're talking net income, PA is way cheaper than I've been led to believe, or there's some factor I'm missing
My rent is about $12,000 a year. I guess the missing factor is that Palo Alto is cheaper than San Francisco (though certainly not cheap! :D).
Think about where your grandfather & grandmother lived, and what the place was like when they lived there. Silicon Valley, for example, was pretty cheap before the tech booms. Speaking to people who moved there in the late 70's and early 80's, there were still orchards and fields everywhere.
What I'm getting at is it's easy to get by on simple jobs like that when you live in Nowhere, WY. Then, later, when the town booms people are incredulous about how you were ever able to afford living there.
What I'm getting at is it's easy to get by on simple jobs like that when you live in Nowhere, WY. Then, later, when the town booms people are incredulous about how you were ever able to afford living there.
They lived in a small house 6 miles from downtown Boston, in a nice middle class residential neighborhood. I couldn't afford to buy that house now. This is the sort of thing that suggests to me a big picture issue.
I couldn't afford to buy that house now
That's exactly my point though, then & now are almost certainly not apples to apples, and "Well I couldn't afford their house today" is exactly the thing that I am saying is a mistake to think.
That's exactly my point though, then & now are almost certainly not apples to apples, and "Well I couldn't afford their house today" is exactly the thing that I am saying is a mistake to think.
It is a state of mind, at least in part.
Older generation, especially those through the hardsihps of war, are happy to live, period. Jobs we consider shitty today (like cashier or truck driver) are much better than infantry man in war torn Europe.
Today's people are much more spoiled, not just in consumerism, but the idea of being above manual labour, freedom to chase your unprofitable goal, not settle until you found a dream job are all quite new.
Older generation, especially those through the hardsihps of war, are happy to live, period. Jobs we consider shitty today (like cashier or truck driver) are much better than infantry man in war torn Europe.
Today's people are much more spoiled, not just in consumerism, but the idea of being above manual labour, freedom to chase your unprofitable goal, not settle until you found a dream job are all quite new.
I wouldn't necessarily say this is related to the economy (The economy has other issues), but more related to our culture. Our entire culture is focused around consuming, buying the next thing, having the nicest stuff, etc. Heck our high schools even teach us how to properly consume, and how to acquire things we cannot afford.
However in life you will have to pass up some things you want in order to maintain living within your means, as a result you are going against the constant consuming behavior that our culture has taught us, and feel a failure for not buying all that stuff.
I couldn't speak to the social pressures of the past (I didn't live through them). My personal experience is that when I was able to ignore the consuming pressure society gives, the amount of stress and pressure plummet and I have been able to enjoy life much to a higher standard.
Those middle managers may be in that sweet spot of enough to be comfortable and feel successful, but not so successful they feel the need to compete with the consuming elite of execs and millionaires. Don't be fooled though, there are plenty of people in other "class brackets" that are able to shed the stress and pressure of the US culture.
However in life you will have to pass up some things you want in order to maintain living within your means, as a result you are going against the constant consuming behavior that our culture has taught us, and feel a failure for not buying all that stuff.
I couldn't speak to the social pressures of the past (I didn't live through them). My personal experience is that when I was able to ignore the consuming pressure society gives, the amount of stress and pressure plummet and I have been able to enjoy life much to a higher standard.
Those middle managers may be in that sweet spot of enough to be comfortable and feel successful, but not so successful they feel the need to compete with the consuming elite of execs and millionaires. Don't be fooled though, there are plenty of people in other "class brackets" that are able to shed the stress and pressure of the US culture.
I'm a Canadian expat in San Francisco, and one of my favourite cultural-tourist hobbies is comparing my public school experience with my (American) girlfriend's
> Heck our high schools even teach us how to properly consume, and how to acquire things we cannot afford.
I'm curious as to what you mean by this. Could you elaborate, for someone who never went through your highschool system? Thanks!
> Heck our high schools even teach us how to properly consume, and how to acquire things we cannot afford.
I'm curious as to what you mean by this. Could you elaborate, for someone who never went through your highschool system? Thanks!
Too many hippies on this thread.
The biggest problem with the us economy currently is the erosion of middle class jobs for unskilled and semi-skilled labor. My grandparents lived comfortably on union jobs. Most of those jobs are gone now, and those that exist are paying less all the time. I know a man who is 60 working in a lumber mill making less then he ever has in his life (40+ years of factory work).
Yes sure consumption has increased with affluence but Many people don't realize how hard it is for an unskilled and unconnected person to find any kind of work. I know some Iraqi refugees who could not even get agriculture work because the Hispanic population always filled any open jobs through network effects.
The only jobs that exist for unskilled labor are service sector, fast food &tc. These may pay enough to survive in many places but it will not be comfortable or secure.
Second biggest problem is the rising cost of healthcare. 15% of GDP and growing, more than half of that is government paid (medicare / medicaid / etc). My father is self-employed so purchases his own healthcare, but there is no out-of-pocket maximum for him so when my mother was diagnosed with cancer there was a massive financial cost despite 80% being paid by the insurance company.
There are other problems as well, but those are the biggest cause of financial insecurity and lower lifestyle quality among the bottom quintile of US citizens.
Edit:
Fewer hippies after I had composed my rant. Re: rents. yeah they are bad but really only outrageous on the coasts. So depending on your location the rent can kill you, but in my hometown it was never a big deal.
The biggest problem with the us economy currently is the erosion of middle class jobs for unskilled and semi-skilled labor. My grandparents lived comfortably on union jobs. Most of those jobs are gone now, and those that exist are paying less all the time. I know a man who is 60 working in a lumber mill making less then he ever has in his life (40+ years of factory work).
Yes sure consumption has increased with affluence but Many people don't realize how hard it is for an unskilled and unconnected person to find any kind of work. I know some Iraqi refugees who could not even get agriculture work because the Hispanic population always filled any open jobs through network effects.
The only jobs that exist for unskilled labor are service sector, fast food &tc. These may pay enough to survive in many places but it will not be comfortable or secure.
Second biggest problem is the rising cost of healthcare. 15% of GDP and growing, more than half of that is government paid (medicare / medicaid / etc). My father is self-employed so purchases his own healthcare, but there is no out-of-pocket maximum for him so when my mother was diagnosed with cancer there was a massive financial cost despite 80% being paid by the insurance company.
There are other problems as well, but those are the biggest cause of financial insecurity and lower lifestyle quality among the bottom quintile of US citizens.
Edit:
Fewer hippies after I had composed my rant. Re: rents. yeah they are bad but really only outrageous on the coasts. So depending on your location the rent can kill you, but in my hometown it was never a big deal.
> Yes sure consumption has increased with affluence but Many people don't realize how hard it is for an unskilled and unconnected person to find any kind of work.
I wish the focus of the US public discourse was less "how terrible is it that these unskilled people can't find jobs" and more "how can we provide economic stability to these unskilled people and help them become skilled"
I wish the focus of the US public discourse was less "how terrible is it that these unskilled people can't find jobs" and more "how can we provide economic stability to these unskilled people and help them become skilled"
Something does not add up here or, at the very least, I am missing something important.
I live in Seattle proper, rent an apartment that is relatively expensive by Seattle standards, have a ten year old car, no dependents, etc and have lived that way on a similar income. I am not frugal but I also don't buy much "stuff" which probably has the same effect as being frugal. It would be hard to argue that my life is not comfortable.
Somehow I managed to save tens of thousands of dollars per year after taxes which, invested sensibly and lazily, accumulates pretty quickly into a substantial chunk of change. This is not because I am a great saver or a financial wizard, it was kind of a default outcome.
How much do you think you should be saving every year such that saving tens of thousands every year is not enough?
I live in Seattle proper, rent an apartment that is relatively expensive by Seattle standards, have a ten year old car, no dependents, etc and have lived that way on a similar income. I am not frugal but I also don't buy much "stuff" which probably has the same effect as being frugal. It would be hard to argue that my life is not comfortable.
Somehow I managed to save tens of thousands of dollars per year after taxes which, invested sensibly and lazily, accumulates pretty quickly into a substantial chunk of change. This is not because I am a great saver or a financial wizard, it was kind of a default outcome.
How much do you think you should be saving every year such that saving tens of thousands every year is not enough?
>How much do you think you should be saving every year such that saving tens of thousands every year is not enough?
OP may not have always had such a high-paying gig. I lost years of potential retirement savings working for under-funded startups (including my own). I'm making good money now and put a decent amount of money into retirement and savings, but I do feel like I'm really far behind compared to similarly-aged friends who stayed in the corporate track.
OP may not have always had such a high-paying gig. I lost years of potential retirement savings working for under-funded startups (including my own). I'm making good money now and put a decent amount of money into retirement and savings, but I do feel like I'm really far behind compared to similarly-aged friends who stayed in the corporate track.
Thanks for sharing. I'm in my late thirties and I currently have no job. I am waiting to hear back from a 'Kelly' temp agency employee (who was high as shit when he spoke with me) for a job assembling plastic parts for $8. This might amount to less than $150 take home as I might have to take a cab home because the buses don't run after the shift ends. I rent a room in a trailer with no door which had a leaky roof until we put a tarp over it. Additionally my mother has emphysema, works 7 days a week and I am powerless to do anything for her.
I'm convinced that all the geek analyzing of 'structural' economic problems are partially in vain. I think human beings are inherently social animals, thus until the financial moguls, billionaires, the Mark Zuckerbergs and Larry Pages of the world literally feel that people like me have the power to kill them.... then nothing will change.This is the same carnal belief that lead to our democratic social order. Even if you believe in things like a 'living wage' , without the support from the wealthy it won't happen. Those people like most don't do shit unless their is something in it for them, but people like me have no leverage other than being semi suicidal and wanting to kill something.
Voting doesn't work and the government doesn't care.
I really don't think it's too complicated. If 5 U.S. billionaires were murdered under the banner of a living wage for all Americans at least a more honest discussion would ensue among circles that have social clout.
So that's my synopsis.
Enjoy life and.. Have fun!
I'm convinced that all the geek analyzing of 'structural' economic problems are partially in vain. I think human beings are inherently social animals, thus until the financial moguls, billionaires, the Mark Zuckerbergs and Larry Pages of the world literally feel that people like me have the power to kill them.... then nothing will change.This is the same carnal belief that lead to our democratic social order. Even if you believe in things like a 'living wage' , without the support from the wealthy it won't happen. Those people like most don't do shit unless their is something in it for them, but people like me have no leverage other than being semi suicidal and wanting to kill something.
Voting doesn't work and the government doesn't care.
I really don't think it's too complicated. If 5 U.S. billionaires were murdered under the banner of a living wage for all Americans at least a more honest discussion would ensue among circles that have social clout.
So that's my synopsis.
Enjoy life and.. Have fun!
Random ramble to follow
I know how you feel but at the same time my sister and brother in law make 2/3rd what you make, own a house, a timeshare, raises a kid, home schools, volunteers, her and my nephew are docents at the museum of the pacific, she teaches MS office and other home maker type computer classes (as in how to make a newsletter on your computer), She's in several clubs (the moms club, a bowling club, a bunko club, etc.) she's got a yearly pass to disneyland and goes at least twice a month, used to be at least once a week.
What she doesn't have: She lives near the Pomona fairgrounds in LA not in Seattle. She drives a 20-30 year old car. She's got old furniture and old TVs, CRT not LCD, she's enjoying her life way more than pretty much anyone I know.
None of this is meant to take away your valid feeling that even making low 6 figures you feel like you're struggling. I'm the same way. Especially when I lived in SF I thought to myself "I'm making good money, why does it seem like I can't afford to live here?"
Move to Tokyo, Singapore, HK, or NYC if you really want to feel like a financial failure. In those cities you'll see large portions of them cater to people making 7 figures.
I know how you feel but at the same time my sister and brother in law make 2/3rd what you make, own a house, a timeshare, raises a kid, home schools, volunteers, her and my nephew are docents at the museum of the pacific, she teaches MS office and other home maker type computer classes (as in how to make a newsletter on your computer), She's in several clubs (the moms club, a bowling club, a bunko club, etc.) she's got a yearly pass to disneyland and goes at least twice a month, used to be at least once a week.
What she doesn't have: She lives near the Pomona fairgrounds in LA not in Seattle. She drives a 20-30 year old car. She's got old furniture and old TVs, CRT not LCD, she's enjoying her life way more than pretty much anyone I know.
None of this is meant to take away your valid feeling that even making low 6 figures you feel like you're struggling. I'm the same way. Especially when I lived in SF I thought to myself "I'm making good money, why does it seem like I can't afford to live here?"
Move to Tokyo, Singapore, HK, or NYC if you really want to feel like a financial failure. In those cities you'll see large portions of them cater to people making 7 figures.
'Move somewhere else' is totally missing the point.
If everyone moves to those particular low-rent places, that increases the demand there, and rents will go up until housing supply increases to meet demand (or, like SF, it never increases and prices just keep going up). This is ignoring the problem of finding work in low-rent areas (though telecommuting at least makes that less difficult.)
To me, 'the problem is where you live' is utterly condescending. Would it be reasonable to tell a minimum wage worker, who works 80+ hours a week, that his problem is where he lives and he should just move? How is that person supposed to afford to move when they can barely pay rent every month? Do you really think THAT is the problem, that some people happen to live/work in a certain location, and it would be better if they just moved to where all the other low-income families live?
For a concrete example: I used to work in the Seattle area for a few years. I 'solved' the rent costs problem by living way to the east, in the Issaquah mountains.
Unfortunately this meant a 30-60 minute car commute each way, along with a big increase in car maintenance/fuel expenses. And because I was in the mountains, every winter the occasional ice storm would knock out power/heat for 1-2 weeks, or the mountain roads would be so iced over that I couldn't get to work. Days I'm not working are days I'm not getting paid; if I'm lucky I don't get fired.
Yeah, solves everything, doesn't it?
If everyone moves to those particular low-rent places, that increases the demand there, and rents will go up until housing supply increases to meet demand (or, like SF, it never increases and prices just keep going up). This is ignoring the problem of finding work in low-rent areas (though telecommuting at least makes that less difficult.)
To me, 'the problem is where you live' is utterly condescending. Would it be reasonable to tell a minimum wage worker, who works 80+ hours a week, that his problem is where he lives and he should just move? How is that person supposed to afford to move when they can barely pay rent every month? Do you really think THAT is the problem, that some people happen to live/work in a certain location, and it would be better if they just moved to where all the other low-income families live?
For a concrete example: I used to work in the Seattle area for a few years. I 'solved' the rent costs problem by living way to the east, in the Issaquah mountains.
Unfortunately this meant a 30-60 minute car commute each way, along with a big increase in car maintenance/fuel expenses. And because I was in the mountains, every winter the occasional ice storm would knock out power/heat for 1-2 weeks, or the mountain roads would be so iced over that I couldn't get to work. Days I'm not working are days I'm not getting paid; if I'm lucky I don't get fired.
Yeah, solves everything, doesn't it?
We're not talking about a minimum wage worker. The OP said he made > $100k a year.
I'm not sure what your point is. Plenty of people choose to live in cheaper places for lower salaries or for that matter cheaper places for the same salary. Plenty of people also choose to live far from work and have a really long commute. It's a CHOICE. You make it, you live with it. If you want to live in an expensive place that's also your CHOICE.
I had a friend who lived in Laguna Beach, CA and got a job in Studio City. He then whined about how his life sucked because this commute was so long (~2hrs in traffic). He wanted special treatment because of his hardship. It was pointed out that was HIS CHOICE. The rest of the employees chose to live closer to the company. He CHOOSE to have a long commute because he wanted to stay in Laguna Beach. Eventually he got a job somewhere closer to his house rather. Again, his CHOICE.
I have another friend who moved to Arkansas from Orange County. In Orange County he was paying $1200 (a while ago) a month for 2 bedroom apartment. In Arkansas he had a 3 bedroom house on 1.5 acres of land for $350 a month. Again that was his choice.
The world doesn't owe you a nice place to live in an exciting area of the world for a cheap price.
I'm not sure what your point is. Plenty of people choose to live in cheaper places for lower salaries or for that matter cheaper places for the same salary. Plenty of people also choose to live far from work and have a really long commute. It's a CHOICE. You make it, you live with it. If you want to live in an expensive place that's also your CHOICE.
I had a friend who lived in Laguna Beach, CA and got a job in Studio City. He then whined about how his life sucked because this commute was so long (~2hrs in traffic). He wanted special treatment because of his hardship. It was pointed out that was HIS CHOICE. The rest of the employees chose to live closer to the company. He CHOOSE to have a long commute because he wanted to stay in Laguna Beach. Eventually he got a job somewhere closer to his house rather. Again, his CHOICE.
I have another friend who moved to Arkansas from Orange County. In Orange County he was paying $1200 (a while ago) a month for 2 bedroom apartment. In Arkansas he had a 3 bedroom house on 1.5 acres of land for $350 a month. Again that was his choice.
The world doesn't owe you a nice place to live in an exciting area of the world for a cheap price.
Calling it a choice is absurd. People don't choose where they're born, where their family lives, where their job opportunities are, and where they can get access to essential health care and other resources.
People like you or me certainly choose to move to LA or Seattle or San Francisco for a cushy tech job, but that's a tiny percentage of the population.
To me, this is like telling a diabetic that they 'choose' to inject insulin and check their blood sugar every day. Certainly they can exercise free will and stop, but there are severe consequences that make that not a realistic option.
People like you or me certainly choose to move to LA or Seattle or San Francisco for a cushy tech job, but that's a tiny percentage of the population.
To me, this is like telling a diabetic that they 'choose' to inject insulin and check their blood sugar every day. Certainly they can exercise free will and stop, but there are severe consequences that make that not a realistic option.
$110k isn't very much for late-30s professional anymore, especially for a single income earner.
$150k x 2 for Seattle, or $200-250k x2 for SFBA, is more like a high-end DINK situation, if you count the value of stock and other benefits. $110k is solidly middle class, and fine if you're in your 20s, but by late 30s I'd consider that on the low end of someone in the software engineering field.
Muni drivers or police/fire/etc. in SF can easily make in the 100-250k range, without college.
(I agree this is all insane, but...inflation. And particularly in the coastal areas. If we were a separate country from the midwest, inflation would be vastly more pronounced. In SF, items e.g. iPhones bought by your employer cost basically 10-20% what they cost in the midwest bought personally for non-business reasons, once you account for taxes, salary differentials, etc. Crazy.)
$150k x 2 for Seattle, or $200-250k x2 for SFBA, is more like a high-end DINK situation, if you count the value of stock and other benefits. $110k is solidly middle class, and fine if you're in your 20s, but by late 30s I'd consider that on the low end of someone in the software engineering field.
Muni drivers or police/fire/etc. in SF can easily make in the 100-250k range, without college.
(I agree this is all insane, but...inflation. And particularly in the coastal areas. If we were a separate country from the midwest, inflation would be vastly more pronounced. In SF, items e.g. iPhones bought by your employer cost basically 10-20% what they cost in the midwest bought personally for non-business reasons, once you account for taxes, salary differentials, etc. Crazy.)
1) Peak Oil
2) Our so called "health care" system is extremely fubarred.
There's probably more, but those strike me as the big two.
Edit: To elaborate a bit on point 1, Peak Oil is not the end of oil. It is the end of cheap oil. The current U.S. economy and (expected) lifestyle was developed in the era of cheap oil. That era is ending, which is likely part of what is fueling the depression. Our current infrastructure, habits, etc are simply not sustainable with the cost of oil going up and not coming back down. (At this point, if we discovered that Antarctica or the moon were essentially 99% oil with a thin top layer of dust/snow/whatever, that would not solve this because endless expensive oil does not solve the problem here.)
2) Our so called "health care" system is extremely fubarred.
There's probably more, but those strike me as the big two.
Edit: To elaborate a bit on point 1, Peak Oil is not the end of oil. It is the end of cheap oil. The current U.S. economy and (expected) lifestyle was developed in the era of cheap oil. That era is ending, which is likely part of what is fueling the depression. Our current infrastructure, habits, etc are simply not sustainable with the cost of oil going up and not coming back down. (At this point, if we discovered that Antarctica or the moon were essentially 99% oil with a thin top layer of dust/snow/whatever, that would not solve this because endless expensive oil does not solve the problem here.)
Energy spending as percentage of income has gone down.
Also, the inflation adjusted price of gasoline hasn't really changed in a brutal manner:
http://www.randomuseless.info/gasprice/gasprice.html
It's twice as high as the 'typical' trend, but vehicles make better enough mileage to eat most of that.
Edit: and if you drill into it, the shipping cost of the food at the grocery store is probably less than the gas cost of driving to the store. So shipping hits prices, but it hits them when a $0.05 shipping cost for a package of whatever goes to $0.10.
Also, the inflation adjusted price of gasoline hasn't really changed in a brutal manner:
http://www.randomuseless.info/gasprice/gasprice.html
It's twice as high as the 'typical' trend, but vehicles make better enough mileage to eat most of that.
Edit: and if you drill into it, the shipping cost of the food at the grocery store is probably less than the gas cost of driving to the store. So shipping hits prices, but it hits them when a $0.05 shipping cost for a package of whatever goes to $0.10.
Please support your first statement. Because the link you give does not fit with your assertion. It shows price compared to 1979, once of the worst years in the U.S. for the price of gas. The chart shows a steady climb in recent years to a point where it now matches or exceeds the inflation adjusted price of 1979 -- again, one of the worst years for gas prices in the U.S.
http://en.wikipedia.org/wiki/1979_energy_crisis
Further, the theory of Peak Oil is rooted in actual history. After the Alaska oil pipline came online, oil prices steadily went down for a time. It came online in 1977 and the reduction was in the 1980's: http://www.api.org/oil-and-natural-gas-overview/exploration-...
So please explain to me how a chart showing that current prices are, in real terms, as bad as or worse than 1979 prices supports your first statement.
Thank you.
http://en.wikipedia.org/wiki/1979_energy_crisis
Further, the theory of Peak Oil is rooted in actual history. After the Alaska oil pipline came online, oil prices steadily went down for a time. It came online in 1977 and the reduction was in the 1980's: http://www.api.org/oil-and-natural-gas-overview/exploration-...
So please explain to me how a chart showing that current prices are, in real terms, as bad as or worse than 1979 prices supports your first statement.
Thank you.
I was sort of sloppily making two points. Gas prices are energy prices that 'we really feel', and they have only gone up some; qualitatively, gas is still cheap enough that (many) people drive around without thinking about it much.
This shows residential energy as a percentage going down:
http://www.eia.gov/todayinenergy/detail.cfm?id=10891
This shows gasoline roughly matching the other link:
http://www.eia.gov/todayinenergy/detail.cfm?id=9831
But to the point, a 1 or 2% increase in gasoline spending might stink, but it shouldn't be smashing the economy.
This shows residential energy as a percentage going down:
http://www.eia.gov/todayinenergy/detail.cfm?id=10891
This shows gasoline roughly matching the other link:
http://www.eia.gov/todayinenergy/detail.cfm?id=9831
But to the point, a 1 or 2% increase in gasoline spending might stink, but it shouldn't be smashing the economy.
I think it's a big mistake to assume most of the expensive oil effect are through direct energy expenditures.
Consider what is listed as "shelter", "transportation" and "food". The biggest costs are there, according to the first page you linked. Those areas heavily affected by cost of energy and reduce what is available for all the rest, including spending on gasoline.
Are vehicle miles going up or down? Maybe gasoline spending is not increasing, because people just don't have any money left for it?
Consider what is listed as "shelter", "transportation" and "food". The biggest costs are there, according to the first page you linked. Those areas heavily affected by cost of energy and reduce what is available for all the rest, including spending on gasoline.
Are vehicle miles going up or down? Maybe gasoline spending is not increasing, because people just don't have any money left for it?
Yeah, it's not a great measure.
Well, I have had two classes on Peak Oil and I really don't agree. To reiterate: The current U.S. economy/lifestyle is based on cheap oil. Cheap oil is gradually disappearing. It will only get worse from here. This is just the beginning. Since cheap oil is a foundation stone for our current culture, changes there will be felt wide and deep.
But I guess this is the point at which we agree to disagree.
Thank you for responding. (Edit: and have some upvotes)
But I guess this is the point at which we agree to disagree.
Thank you for responding. (Edit: and have some upvotes)
Energy cost and availability are a real issue, it's just that if you look backwards, there isn't much of story about where we are right now.
(I would take this a step further and say that $4 is still cheap for gasoline; it isn't clear that the much higher fuel prices in Europe have been bad economically. And I'm someone who got to start driving in the '90s when prices fell below a dollar)
(I would take this a step further and say that $4 is still cheap for gasoline; it isn't clear that the much higher fuel prices in Europe have been bad economically. And I'm someone who got to start driving in the '90s when prices fell below a dollar)
Concentrating blindly on the gasoline price is misleading. Consider our environment: We largely wear products made directly or indirectly out of fossil fuels. We eat food grown using synthetic fertilizers made out of natural gas. That's also where the plastic in the keyboard you're typing on came from. Not to mention the rest of your computer which probably took at least a barrel of oil to produce from mining the ores to the finished product.
We live in compounds built out of materials that at least in some phase of their production include major oil or gas inputs. We drive and walk on roads literally made out of oil, in vehicles that were built out of parts which required major amounts of oil.
We live in an era of oil, our life is based on oil.
For now.
We live in compounds built out of materials that at least in some phase of their production include major oil or gas inputs. We drive and walk on roads literally made out of oil, in vehicles that were built out of parts which required major amounts of oil.
We live in an era of oil, our life is based on oil.
For now.
I'm not denying peak oil, I'm arguing that oil prices (and other energy prices) have not gone up so much in recent decades that they have smashed the economy. They must impact the economy, but I sure would point to things like increased size of the domestic labor force, the skill hoisting of the global labor force and automation before I would point to energy prices. And then things like expectations of skilled labor in the U.S. have changed substantially.
I guess we'll see soon enough. I think oil price is the real reason behind the economic trouble.
I think we're in for several more 2008-style stair step economic crashes over a longer period of time, with little growth between them. At least until we can truly replace oil as a transportable high density energy source. (Or until political and societal systems break down.)
Hopefully we get some major new energy source, like cheap fusion or space based generation, like orbital mass production of photovoltaics panels and beaming it back to earth in microwaves. Given sufficient energy, we could just synthesize the liquid fuels we need.
There's unfortunately a low chance we get this magic energy source in time, but let's hope for the best.
I think we're in for several more 2008-style stair step economic crashes over a longer period of time, with little growth between them. At least until we can truly replace oil as a transportable high density energy source. (Or until political and societal systems break down.)
Hopefully we get some major new energy source, like cheap fusion or space based generation, like orbital mass production of photovoltaics panels and beaming it back to earth in microwaves. Given sufficient energy, we could just synthesize the liquid fuels we need.
There's unfortunately a low chance we get this magic energy source in time, but let's hope for the best.
I have gone back and checked your links in your second reply. The second one indicates we are now spending between 4% and 6% of total household income on gasoline, which is double or triple what it was in 1979 at 2% of total household income. That's one helluva a jump.
And the residential energy link you gave: This is the headline: "Lower residential energy use reduces home energy expenditures as share of household income". So people are apparently reducing their use of energy, probably in part because they are feeling pinched.
At this point, it looks to me like you and I do not see the same conclusions from the same data. I don't understand how you can submit the links you did in support of your point of view here.
So I think it's probably best to walk away from this discussion.
Thank you.
And the residential energy link you gave: This is the headline: "Lower residential energy use reduces home energy expenditures as share of household income". So people are apparently reducing their use of energy, probably in part because they are feeling pinched.
At this point, it looks to me like you and I do not see the same conclusions from the same data. I don't understand how you can submit the links you did in support of your point of view here.
So I think it's probably best to walk away from this discussion.
Thank you.
You are reading the graph incorrectly. The values for percent of mean income are in the line graph and shown on the right axes. So in 1979, 5%, 2012, 4%.
It's not a very good measure, it isn't worth analyzing it deeply, but (to me anyway), it doesn't point to a massive increase in energy spending.
It's not a very good measure, it isn't worth analyzing it deeply, but (to me anyway), it doesn't point to a massive increase in energy spending.
[deleted]
Well, things have changed since our grandparent's generation. A college degree used to be a guaranteed ticket to a decent job, and even many blue collar jobs were much better paying and less abusive. Now being 30 years old and living with your parents is not that odd.
Now, debt, unemployment and inflation are soaring (if you want to see how bad it really is, visit cities like Detroit or the non-wealthy areas of Chicago).
There is a growing wealth divide. I have nothing against "1 percenters" but I do believe the gap is becoming dangerous. 95 percent of recovered funds from this recent "improvement" in the economy (since the last crash) have gone to the wealthiest 1 percent.
Our government's budget is increasing in size, but they are not spending money any more wisely. Certain contractors make a killing (particularly in the military sector), and its kind of a false economy based not on merit but who puts money back into their politician's pocket (in the "real" world, the healthcare.gov site would have been built for a fraction of the cost and its failure would have been a huge blow to the company that created it).
Part of this is people failing to adapt to the changing world or feeling too entitled and expecting their corrupt/indifferent government to fix every problem. Part of it is that automation and oversea workers are claiming many jobs (but these are crappy jobs you wouldn't want anyway). Automation is even going into territories you might not think of. 100 years ago the US population was almost half farmers (IIRC), and now it is less than 2 percent.
Basically, you are not delusional. Things are getting harder, and worse. Competition is getting fierce as everyone is increasingly competing to justify their worth to employers. The economy is definitely in a bubble because the stock indices does not reflect the reality of debt, unemployment, and our stale economy right now. I have no good idea of how these problems can be solved. I am no Luddite, but I think that perhaps taking a step backwards in time could be an interesting experiment - create more towns that are self-sufficient, grow their own crops, build their own houses, etc. It seems like much of the wealth is getting boiled down into the hands of fewer and fewer big companies.
Now, debt, unemployment and inflation are soaring (if you want to see how bad it really is, visit cities like Detroit or the non-wealthy areas of Chicago).
There is a growing wealth divide. I have nothing against "1 percenters" but I do believe the gap is becoming dangerous. 95 percent of recovered funds from this recent "improvement" in the economy (since the last crash) have gone to the wealthiest 1 percent.
Our government's budget is increasing in size, but they are not spending money any more wisely. Certain contractors make a killing (particularly in the military sector), and its kind of a false economy based not on merit but who puts money back into their politician's pocket (in the "real" world, the healthcare.gov site would have been built for a fraction of the cost and its failure would have been a huge blow to the company that created it).
Part of this is people failing to adapt to the changing world or feeling too entitled and expecting their corrupt/indifferent government to fix every problem. Part of it is that automation and oversea workers are claiming many jobs (but these are crappy jobs you wouldn't want anyway). Automation is even going into territories you might not think of. 100 years ago the US population was almost half farmers (IIRC), and now it is less than 2 percent.
Basically, you are not delusional. Things are getting harder, and worse. Competition is getting fierce as everyone is increasingly competing to justify their worth to employers. The economy is definitely in a bubble because the stock indices does not reflect the reality of debt, unemployment, and our stale economy right now. I have no good idea of how these problems can be solved. I am no Luddite, but I think that perhaps taking a step backwards in time could be an interesting experiment - create more towns that are self-sufficient, grow their own crops, build their own houses, etc. It seems like much of the wealth is getting boiled down into the hands of fewer and fewer big companies.
> I am no Luddite, but I think that perhaps taking a step backwards in time could be an interesting experiment - create more towns that are self-sufficient, grow their own crops, build their own houses, etc. It seems like much of the wealth is getting boiled down into the hands of fewer and fewer big companies.
They tried that once, and it turns out tha tin practice this idea is much much worse than you'd think it is at the surface: http://en.wikipedia.org/wiki/Garden_city_movement
Maybe it would be different now, what with communications technology like the internet making proximity to major city centers less important. But to me, this doesn't sound like a practical solution
They tried that once, and it turns out tha tin practice this idea is much much worse than you'd think it is at the surface: http://en.wikipedia.org/wiki/Garden_city_movement
Maybe it would be different now, what with communications technology like the internet making proximity to major city centers less important. But to me, this doesn't sound like a practical solution
My grandparents worked quite hard. Harder than my (Silent Generation ) Dad, harder than I do. Paternal g-pa was in oilfield, then a carpenter. At his age, you worked til you wore out, then after ten years... Maternal g-pa was an entrepreneur of some sort, kinds hazy what really.
Paternal Grandpa as it turns out was in some labor unrest in the Mid-Continent oil labor-strike ( with actual Wobblies! ) and that is why he went into carpentry. Violent business; gunfire, explosives. Wow. Grandpa? Really?
I was in gummint contracting from 2004-2009. It's not good in there. A few contracts are really large but it's not a good business any more. healthcare.gov is sadly probably more typical than not.
I think we're somewhat frog-boiled in luxury myself. Really look at what was the style in 1960; it was pretty spare - about what you'd have now if you were quite poor. I got new clothes basically once a year - from Sears, and they came on a train six weeks later. From Sears to Amazon in three decades...
The... uh .. Vietnam War made young men have more options then, but we don't wanna go there...
I think the higher returns constitute "winner take all" - and that means competition is actually less. Each option is much like the other, so the winner can leverage out the losers - winner take all. Of those, some fraction will persist. If innovation is heat to Schumpeterian change, then the heat is up. The rest is just endless laying off of risk through contracts/contracting.
But the basic thing is - you'd just expect more growth at the right of the curve.
Paternal Grandpa as it turns out was in some labor unrest in the Mid-Continent oil labor-strike ( with actual Wobblies! ) and that is why he went into carpentry. Violent business; gunfire, explosives. Wow. Grandpa? Really?
I was in gummint contracting from 2004-2009. It's not good in there. A few contracts are really large but it's not a good business any more. healthcare.gov is sadly probably more typical than not.
I think we're somewhat frog-boiled in luxury myself. Really look at what was the style in 1960; it was pretty spare - about what you'd have now if you were quite poor. I got new clothes basically once a year - from Sears, and they came on a train six weeks later. From Sears to Amazon in three decades...
The... uh .. Vietnam War made young men have more options then, but we don't wanna go there...
I think the higher returns constitute "winner take all" - and that means competition is actually less. Each option is much like the other, so the winner can leverage out the losers - winner take all. Of those, some fraction will persist. If innovation is heat to Schumpeterian change, then the heat is up. The rest is just endless laying off of risk through contracts/contracting.
But the basic thing is - you'd just expect more growth at the right of the curve.
Defense is a decent-sized portion of government spending, but entitlement spending (especially when you consider state budgets) is much larger.
If you would like to see the government spend money more wisely, focusing on making entitlement costs tractable should be the top priority.
That's not to say that government contracting isn't grossly dysfunctional.
If you would like to see the government spend money more wisely, focusing on making entitlement costs tractable should be the top priority.
That's not to say that government contracting isn't grossly dysfunctional.
The difference is that defense is an unnecessarily expense. There is no credible military threat to the United States in the world right now. We would be just as safe if we stopped maintaining such a gigantic standing army and stopped interfering in overseas conflicts.
In contrast, spending for healthcare, education, and welfare measurably makes Americans' lives better. Cutting funding for these programs looks attractive for those who don't use them anyway (the rich), but would ultimately widen the class divide and be harmful to the country.
In contrast, spending for healthcare, education, and welfare measurably makes Americans' lives better. Cutting funding for these programs looks attractive for those who don't use them anyway (the rich), but would ultimately widen the class divide and be harmful to the country.
The problem is macroeconomic illiteracy by policy makers and the press has the economy underperforming. Taxes are to high and spending is to low and policy makers believe the government -which can issue infinite amounts of currency- can actually go bankrupt. We can model the macro economy using 3 sectors: foreign , domestic , and government with money changing hands between each sector. Money flows into the gov sector via taxation and out via spending. Money flows out of the domestic via taxation(to government) or spending on foreign and in via government spending or foreign consumption. Foreign is similar to domestic. In order for any sector in aggregate to increase its income, the other sector(s) needs to spend more than its receives from other sectors by either going into debt or spending from savings. Now, with austerity carrying the day in Washington, the private sector cannot increase its aggregate income with money flowing from the government sector. With the foreign sector structured to mostly export to America ( worlds largest consumer) income is not going to flow from there. The only thing left is for the domestic sector to borrow and spend from savings till it all blows up again. After it blows up, automatic stabilizers go into effect ( unemployment, food stamps, stimulus etc , lower taxes due to less income tax revenue) the government picks up the slack and the economy recovers proportional to net government spending. This is the cycle our economy ( if not the world's) operates on.
Income guarantee/Job guarantee, lower taxes, and infrastructure programs would serve to proactively increase income to the domestic sector. The political will -due to deficit myths- to do what is required doesn't exist.
Income guarantee/Job guarantee, lower taxes, and infrastructure programs would serve to proactively increase income to the domestic sector. The political will -due to deficit myths- to do what is required doesn't exist.
The problem is the rich are getting richer, and the middle class is shrinking. Actual inflation-adjusted pay for most people hasn't risen in 30 years, while for the top of the top it's skyrocketed. Meanwhile, everything is more expensive, and unemployment is high thanks to the apparent political impossibility of introducing stimulus spending in a time of lowered demand and zero interest rate (cutting interest rates is the usually the easiest way to stimulate the economy, but you can't do that when you're at zero already). The money moved into finance, distorted everything thanks to deregulation, and screwed up the country, and the world to a certain extent. Europe in the meantime is addicted to debilitating austerity measures; the populations haven't exploded yet only because most of them have excellent social safety nets.
Things really were better in the 60's and 70's from the point of view of how everyone was doing, what they could afford and with how much effort spent to afford it.
Also, if you're a tech guy living in a tech area, cost of living is probably higher than average. And the US has expensive health care, thanks to, until recently, stubbornly refused all attempts to socialize it.
Things really were better in the 60's and 70's from the point of view of how everyone was doing, what they could afford and with how much effort spent to afford it.
Also, if you're a tech guy living in a tech area, cost of living is probably higher than average. And the US has expensive health care, thanks to, until recently, stubbornly refused all attempts to socialize it.
"debilitating austerity measures"
http://www.leftfootforward.org/images/2011/05/Government-spe... (United Kingdom)
http://multiplier-effect.org/files/2012/10/Eurozone-Governme... (Continental Europe)
Yup, that's some real bone-cutting austerity right there... </sarcasm>
http://www.leftfootforward.org/images/2011/05/Government-spe... (United Kingdom)
http://multiplier-effect.org/files/2012/10/Eurozone-Governme... (Continental Europe)
Yup, that's some real bone-cutting austerity right there... </sarcasm>
As % of GDP? Gee that mightn't be because the GDP and revenues plummeted would it? And aside from automatic raises in spending for social security, what do those graphs say about cuts in other areas? These are very misleading.
There's no actual debate on whether or not austerity measures were implemented. They were, and the governments of said countries brag about it, or are pressured into it. And suffer for it.
There's no actual debate on whether or not austerity measures were implemented. They were, and the governments of said countries brag about it, or are pressured into it. And suffer for it.
I believe surrounding yourself with highly creative people is the problem you're talking about.
I just had this conversation with a friend of mine last night. It seems the answer is nothing. You're situation, which is very similar to my own, is a pretty good one.
You've worked so hard. You've gotten so far. Yet something is off. You've made it and then immediately readjusted the goal posts. Now you haven't made it. Your situation sucks and you don't know why. Well, it doesn't suck but something is off.
I believe this desire is born out of those productive creative people you're exposed to; be it your friends in real life or on Facebook or just people you look up to or read about.
The pressure you're feeling is the comparison you make between yourself and others; it's the death knell of ever feeling good about yourself. You'll never feel satisfied because you're not a successful writer or actor or musician or scrabble player or race car driver or etc like your friends are.
I think the pressure you're feeling is WhatApps gets acquired for $19 billion and you go "damn it I'm how old and how creative and fuck I can't even write a damn blog post and these guys carve out some time and make something badass."
You're economic success is not inline with your actual creative output or potential. Bottom line, sounds like you have some creative juices pent up that need to be let out.
Go make something.
Because if the economy is bad you're not feeling it(110k, decent savings, no debt?, paid-off car, etc.), so it might be something else.
I just had this conversation with a friend of mine last night. It seems the answer is nothing. You're situation, which is very similar to my own, is a pretty good one.
You've worked so hard. You've gotten so far. Yet something is off. You've made it and then immediately readjusted the goal posts. Now you haven't made it. Your situation sucks and you don't know why. Well, it doesn't suck but something is off.
I believe this desire is born out of those productive creative people you're exposed to; be it your friends in real life or on Facebook or just people you look up to or read about.
The pressure you're feeling is the comparison you make between yourself and others; it's the death knell of ever feeling good about yourself. You'll never feel satisfied because you're not a successful writer or actor or musician or scrabble player or race car driver or etc like your friends are.
I think the pressure you're feeling is WhatApps gets acquired for $19 billion and you go "damn it I'm how old and how creative and fuck I can't even write a damn blog post and these guys carve out some time and make something badass."
You're economic success is not inline with your actual creative output or potential. Bottom line, sounds like you have some creative juices pent up that need to be let out.
Go make something.
Because if the economy is bad you're not feeling it(110k, decent savings, no debt?, paid-off car, etc.), so it might be something else.
I make $65000 in NYC and support my wife also. We live in a 2 bedroom with a one hour commute. At this time I feel like I'm making more money than I can easily spend - and easily better off than any generation of my white american family before me. I eat out or order in 5 times a week at least.
Its hard for me to imagine scraping by at $110k, truthfully.
Its hard for me to imagine scraping by at $110k, truthfully.
I've had discussions with my friend in NYC. He's married in NYC, I'm single in SF. My salary is $10k/yr more than his, so why do I feel like I'm barely getting by, while he's doing all these crazy Rich New York Person things.
So I did some rough calculations. According to paycheckcity.com, despite his making $10k gross less than me, when you factor in tax differences (between states, and his marital status), his take-home is $6000 MORE than me.
If you make $65k gross in NYC, and you're married, by half-assed extrapolation that puts you in the same boat as a single person in SF making $80k. Still not 110k, but a substantial difference.
So I did some rough calculations. According to paycheckcity.com, despite his making $10k gross less than me, when you factor in tax differences (between states, and his marital status), his take-home is $6000 MORE than me.
If you make $65k gross in NYC, and you're married, by half-assed extrapolation that puts you in the same boat as a single person in SF making $80k. Still not 110k, but a substantial difference.
I live in a quite nice 2br condo in Seattle proper. I make just slightly less than you do. I don't live frugally at all, including eating out far more than I should and plenty of discretionary shopping. I have nearly $80k in student loan debt, and I contribute liberally to retirement accounts.
Even with all of that, I've got a healthy buffer in my budget, which is currently going towards a rainy day fund, and will be redirected toward loans after that. Within 3 years I expect to have a big buffer of money that I don't think I could manage to spend.
So it sounds like the problem is either: you aren't living frugally by reasonable standards, you're leaving something big out (dental ranks on your biggest expenses?!), or you have such astronomical standards that I can't ever see you being satisfied.
Even with all of that, I've got a healthy buffer in my budget, which is currently going towards a rainy day fund, and will be redirected toward loans after that. Within 3 years I expect to have a big buffer of money that I don't think I could manage to spend.
So it sounds like the problem is either: you aren't living frugally by reasonable standards, you're leaving something big out (dental ranks on your biggest expenses?!), or you have such astronomical standards that I can't ever see you being satisfied.
Where is all your money going? Living in a studio apartment making $110k, you should be able to save thousands of dollars a month. Sounds like a budgeting problem.
He says: "I live in a studio apartment near Seattle. ... My biggest expenses in the last couple years have been rent, medical, and dental in that order."
Medical and dental can be really pricy. So can big city rents. Last I checked, an SRO in San Francisco was $1000/mo or more. Most areas, higher average income correlates quite closely to higher local living expenses.
So I wouldn't be so quick to judge.
Medical and dental can be really pricy. So can big city rents. Last I checked, an SRO in San Francisco was $1000/mo or more. Most areas, higher average income correlates quite closely to higher local living expenses.
So I wouldn't be so quick to judge.
Location is everything.
SRO was $1250 for me in SF when I was slumming it a couple years ago. That's a shared bathroom and shower for the entire floor.
SRO was $1250 for me in SF when I was slumming it a couple years ago. That's a shared bathroom and shower for the entire floor.
I don't think I'm judging, but rather asking and proposing/guessing.
Let's say his rent is $1,000/month, if that's the biggest expense then rent, medical, and dental together won't be more than $3,000/month. That's a ton of money for basic expenses, but easily doable on $110k/year with plenty left over.
Let's say his rent is $1,000/month, if that's the biggest expense then rent, medical, and dental together won't be more than $3,000/month. That's a ton of money for basic expenses, but easily doable on $110k/year with plenty left over.
Where did you get 1K for rent? I live in CT and my rent is approx 3K for 1 bedroom + den. Income is a bit higher than OP (10K more annually).
~1k is what a studio costs in Seattle. I pay ~1400 for a large 2 bedroom.
From the "$1000/mo or more" in the comment I was replying to. The "or more" adds lots of wiggle room, but it goes both way: he might be paying more, but he surely has the option of paying less. Moving to cheaper digs is one obvious way to help out your budget.
You seem to have missed my point entirely. SRO means "single room occupancy" -- in other words a room like a dorm room where the bathroom is down the hall and shared with the rest of the floor. It's basically a walk-in closet with a bed and maybe a sink. My point was that when I lived in the Bay Area, $1k (or more) bought you a slum in SF of a sort that doesn't even exist in many places. So do not assume a studio apartment in a big city is "cheap." It isn't necessarily true. I recently saw an article on micro apartments in SF that rented for $1850 and were under 300 square feet. SF is probably more expensive than Seattle but that does not mean Seattle is cheap.
Well, without actually knowing where his money is going (thus why I asked) it's impossible to say. I had no trouble digging up apartment listings for Seattle studios (or bigger) under $1,000, but who knows if he's in one of those or in something more expensive.
I think you may have missed my point as well: being financially insecure as a single man making $110k/year is weird, and has to be due to individual circumstances (whether bad luck or bad planning) and has nothing to do with the economy as a whole.
I think you may have missed my point as well: being financially insecure as a single man making $110k/year is weird, and has to be due to individual circumstances (whether bad luck or bad planning) and has nothing to do with the economy as a whole.
I am aware of that aspect. But having been a military wife and lived in different places, I think you are mistaken to say that "if you have X amount of money and not enough, it is just a personal problem." His remarks imply he has high-ish medical expenses. In a European country, that likely would not be a factor. And any place you live, your choices in where to live are not as wide open as you imply. Choosing to pay less on rent may involve exposure to crime or involve very long commutes, either of which can make that low rent make much less sense (driving more involves expense as well, not just gas but wear and tear, possibly higher insurance, etc). It can also simply be inappropriate housing for your needs. (I lived someplace once that went through a period with a lot of "adults only" apartments. After that was made illegal, they made those apartments available to families as well. We looked at one. The open floor plan bachelor pad failed to provide adequate privacy for me and my husband to have a sex life with small kids in the home. We looked elsewhere.)
But, when it comes down to it, I see absolutely no reason for you to dismiss his question simply because you think he has a personal problem. Whether he has a personal problem or not, there are things wrong with the big picture. I don't think it is a less legitimate question just because the asker happens to have a high income. It seems rather ass-holish to reply at all if you have no plans to talk about the thing he asked about and are merely taking this as an opportunity to talk trash about him as an individual.
Of course, that's just my personal opinion. Lots happens on HN that I don't like. I don't run the place, so whatever.
Carry on.
But, when it comes down to it, I see absolutely no reason for you to dismiss his question simply because you think he has a personal problem. Whether he has a personal problem or not, there are things wrong with the big picture. I don't think it is a less legitimate question just because the asker happens to have a high income. It seems rather ass-holish to reply at all if you have no plans to talk about the thing he asked about and are merely taking this as an opportunity to talk trash about him as an individual.
Of course, that's just my personal opinion. Lots happens on HN that I don't like. I don't run the place, so whatever.
Carry on.
What you see as trash talking, I see as pointing out that he may have opportunities to improve his situation by making changes.
He's making something like twice the median income of the US. Whatever his financial problems are, they're not remotely representative. Since his question is based on the assumption that his woes are due to widespread problems, I think it's entirely relevant to point out that they are not.
He's making something like twice the median income of the US. Whatever his financial problems are, they're not remotely representative. Since his question is based on the assumption that his woes are due to widespread problems, I think it's entirely relevant to point out that they are not.
Seattle, mid-to-late thirties = near-constantly increasing rents and increasing health expenses.
If he's actually in proper Seattle and not the surrounding area, the nearest affordable housing might be dozens of miles away from where he works, increasing his transit costs considerably.
Health insurance keeps getting more expensive, and if his plan isn't great he might be shelling out thousands of dollars a year to hit his deductibles, especially if he's not in great health.
'Sounds like a budgeting problem' is missing the point, which is that the set of unavoidable expenses - things you have to pay - keeps getting bigger and bigger, but incomes for a big chunk of the US don't grow quite as fast as that.
If he's actually in proper Seattle and not the surrounding area, the nearest affordable housing might be dozens of miles away from where he works, increasing his transit costs considerably.
Health insurance keeps getting more expensive, and if his plan isn't great he might be shelling out thousands of dollars a year to hit his deductibles, especially if he's not in great health.
'Sounds like a budgeting problem' is missing the point, which is that the set of unavoidable expenses - things you have to pay - keeps getting bigger and bigger, but incomes for a big chunk of the US don't grow quite as fast as that.
If he's actually in proper Seattle and not the surrounding area, the nearest affordable housing might be dozens of miles away from where he works, increasing his transit costs considerably.
As I wrote elsewhere in this thread, Matt Yglesias's book The Rent Is Too Damn High is good on this subject; increasing rent is not some law of nature but a result of development restrictions in many metropolitan areas, which got started in earnest in the '70s and the results of which are getting worse every year with population increases and rising returns to knowledge creation (see Steven Berlin Johnson's Where Good Ideas Come From and Edward Glaeser's The Triumph of the City for more on both).
As I wrote elsewhere in this thread, Matt Yglesias's book The Rent Is Too Damn High is good on this subject; increasing rent is not some law of nature but a result of development restrictions in many metropolitan areas, which got started in earnest in the '70s and the results of which are getting worse every year with population increases and rising returns to knowledge creation (see Steven Berlin Johnson's Where Good Ideas Come From and Edward Glaeser's The Triumph of the City for more on both).
It's difficult to see that point when the example given is so out of the ordinary. It's rare to be unable to save substantially on a six-figure salary while single. Whatever causes him to be unable to do so, it's unusual, and thus a bad place to start if you want to discuss general economic woes.
If you don't mind my asking, how far would you say that $110,000 has gotten you in Seattle?
I've done quite well in Seattle living within my means.
What are your means? What is "quite well"?
I was commenting on the parent "..how far would you say that $110,000 has gotten you in Seattle?"
I've survived in Seattle making that amount, and making half that amount. Each time I've had to adjust my life in order to get what I wanted out of life.
I've survived in Seattle making that amount, and making half that amount. Each time I've had to adjust my life in order to get what I wanted out of life.
Maybe you don't have the health issues his remark implies? (In that after rent, his next highest expense is 'medical and dental'.)
I can't decide if he is commenting on his own situation or just added it in as part of a larger question about the economy.
Most Americans seem to list "house and car (in that order)" as their two biggest expenses. If someone tells you their medical expenses exceed their car expenses, it looks like an issue to me.
Though I could certainly be wrong.
Though I could certainly be wrong.
I'd say effectively nowhere. My lifestyle is literally identical to what it was 15 years ago when I was just starting out. It honestly feels like the goalposts keep moving. I am doing better than my parents, who were poor. I am doing worse than my grandparents, who had 8th grade educations.
I can't help but feel like you're grossly exaggerating your situation.
Convert your rent to a mortgage payment, and lock in $1,500 a month payments (probably around what you are paying in rent right now). The housing prices are only going to go up in Seattle as it becomes more of a tech city (Amazon is building an entire new office in Belltown, for example).
Here's a nice (affordable on 110k) house in Seattle: http://www.zillow.com/homedetails/2809-S-Columbian-Way-Seatt...
And you still have money leftover for a nice German car that depreciates half its value in a few years...
Perhaps you don't want to take on debt. Solid? I'd imagine your grandparents did so to build their house though as well. Also, you can even look outside of the city for cheaper real estate.
Unfortunately, $110k is becoming the new normalized "market value" for highly-qualified software engineers in America, and so the tech neighborhoods are becoming more gentrified and recalibrating their costs of living such that a six-figure salary now makes you a middle class "technocrat". I maintain that living in Seattle, SF, NYC is a "luxury" though. If you aren't happy with your standard of living in one of these luxury cities, there's nothing wrong with a place like Pittsburgh, Houston, or Cleveland where a $400k house is a mansion.
Other than that, there's a luck component to this as well. The waterfront home-owners with garaged Porsche 911s by Burke-Gillman trail in Seattle got in on the Microsoft ship early (i.e. early 90s), the company grew tremendously and they had a stake in revolutionizing the industry, and became millionaires off of their equity. The corporate life treated these Microsoft millionaires well (and chances are they had the same qualifications, skill sets, and risk aversions that you have now), but the opportunity of working at 1990 Microsoft pales in comparison to working at 2010 Microsoft. Nowadays, an entry-level job at Microsoft means having nine managers, living in an outrageously expensive area, and coding C# unit tests all day for a relative pittance. That's not to say Seattle has devolved into a SF or NYC in terms of living cost though.
How to reap the same standard of living today? Give up the cozy big corporate job (six-figures isn't as impressive in 2014 as it was in 1998), take a risk. For instance, join or found a startup that ends up becoming the next FB, invest in something like TSLA or Bitcoin a year ago. I can't say what the path to success looks like now, but I can say that it involves luck, savviness, networking, and risk-taking. Who knows? You MIGHT join the right early-stage company that grows into the next Microsoft empire (I certainly can't tell you which one), and become one of those paragons of success through following the safe corporate job route. However, you can't become complacent doing your 9-5 ASP.NET programming, or you'll never have that waterfront house.
The solution for the Microsoft millionaires of the 90s was to keep their heads to the grindstone and work up the corporate ladder, maybe even hand off to Microsoft some groundbreaking IP from their brains (for instance, the inventors of COM+, PowerShell, FAT32, PE, .NET, etc. probably own those houses). Unfortunately, this safe path no longer has nearly the same results as it did 20 years ago, and readily handing over your million-dollar brain children to a large corporation might give you a 15% raise next year in return.
Convert your rent to a mortgage payment, and lock in $1,500 a month payments (probably around what you are paying in rent right now). The housing prices are only going to go up in Seattle as it becomes more of a tech city (Amazon is building an entire new office in Belltown, for example).
Here's a nice (affordable on 110k) house in Seattle: http://www.zillow.com/homedetails/2809-S-Columbian-Way-Seatt...
And you still have money leftover for a nice German car that depreciates half its value in a few years...
Perhaps you don't want to take on debt. Solid? I'd imagine your grandparents did so to build their house though as well. Also, you can even look outside of the city for cheaper real estate.
Unfortunately, $110k is becoming the new normalized "market value" for highly-qualified software engineers in America, and so the tech neighborhoods are becoming more gentrified and recalibrating their costs of living such that a six-figure salary now makes you a middle class "technocrat". I maintain that living in Seattle, SF, NYC is a "luxury" though. If you aren't happy with your standard of living in one of these luxury cities, there's nothing wrong with a place like Pittsburgh, Houston, or Cleveland where a $400k house is a mansion.
Other than that, there's a luck component to this as well. The waterfront home-owners with garaged Porsche 911s by Burke-Gillman trail in Seattle got in on the Microsoft ship early (i.e. early 90s), the company grew tremendously and they had a stake in revolutionizing the industry, and became millionaires off of their equity. The corporate life treated these Microsoft millionaires well (and chances are they had the same qualifications, skill sets, and risk aversions that you have now), but the opportunity of working at 1990 Microsoft pales in comparison to working at 2010 Microsoft. Nowadays, an entry-level job at Microsoft means having nine managers, living in an outrageously expensive area, and coding C# unit tests all day for a relative pittance. That's not to say Seattle has devolved into a SF or NYC in terms of living cost though.
How to reap the same standard of living today? Give up the cozy big corporate job (six-figures isn't as impressive in 2014 as it was in 1998), take a risk. For instance, join or found a startup that ends up becoming the next FB, invest in something like TSLA or Bitcoin a year ago. I can't say what the path to success looks like now, but I can say that it involves luck, savviness, networking, and risk-taking. Who knows? You MIGHT join the right early-stage company that grows into the next Microsoft empire (I certainly can't tell you which one), and become one of those paragons of success through following the safe corporate job route. However, you can't become complacent doing your 9-5 ASP.NET programming, or you'll never have that waterfront house.
The solution for the Microsoft millionaires of the 90s was to keep their heads to the grindstone and work up the corporate ladder, maybe even hand off to Microsoft some groundbreaking IP from their brains (for instance, the inventors of COM+, PowerShell, FAT32, PE, .NET, etc. probably own those houses). Unfortunately, this safe path no longer has nearly the same results as it did 20 years ago, and readily handing over your million-dollar brain children to a large corporation might give you a 15% raise next year in return.
This is a good comment. Of course I've seen a lot of these Microsoft effects on the area first-hand (I worked there for 5 years, well after that was any big advantage, of course). Once again though, I am not trying to say that I have it that bad. What I'm saying is that if my own situation qualifies as doing really well, then there is something very fucked up on a large scale.
I'm not sure how it is "fucked up" for you at all. Go buy that $400k house that you can afford if you don't like living in a downtown studio. You'll be among the few millennials that own houses. As it stands, you're in the top 5% of earners in the country.
If you want something more extravagant than the linked Zillow home above, then move out of Seattle and remote work out of your own $400k Pittsburgh mansion.
Here's one of many: http://www.zillow.com/homedetails/5760-Evans-Rd-Export-PA-15...
Sure, the weather is considerably crappier, and the locals aren't as educated as in luxury cities like SF/NYC, but you'll be relatively (in other words, extremely) well off -- cost of living is a trade-off. It's a matter of what you value.
If you want something more extravagant than the linked Zillow home above, then move out of Seattle and remote work out of your own $400k Pittsburgh mansion.
Here's one of many: http://www.zillow.com/homedetails/5760-Evans-Rd-Export-PA-15...
Sure, the weather is considerably crappier, and the locals aren't as educated as in luxury cities like SF/NYC, but you'll be relatively (in other words, extremely) well off -- cost of living is a trade-off. It's a matter of what you value.
No matter how many times I've said I'm not complaining about me, but rather using my experience as an indicator of how things must be in the big picture for many others, people just keep on responding like I'm only talking about me. Is it seriously that hard for people to think beyond self?
How is that?
Again, I don't really mean to press you too far with the questions, I'm just a young guy who hears $110,000 and thinks "gee, that's a lot of money".
Again, I don't really mean to press you too far with the questions, I'm just a young guy who hears $110,000 and thinks "gee, that's a lot of money".
Hey, I'm an old(er) guy and I think 110K is a lot of money.
It totally is a lot of money. Unfortunately, everything seems to cost a lot of money these days...
Ten years ago I wouldn't have believed you if you told me I'd be spending nearly $10k a year just to get adequate health care, or over $20k a year just to have a reasonable place to live. I was thrilled when my first salaried job paid $35k/year, and couldn't understand why that barely covered my expenses! $35000 is a lot of money! $110000 is a truckload!
(Thankfully, I'm in the OP's position this year, and I earned more than I spent on essential expenses... not so much last year, though.)
Ten years ago I wouldn't have believed you if you told me I'd be spending nearly $10k a year just to get adequate health care, or over $20k a year just to have a reasonable place to live. I was thrilled when my first salaried job paid $35k/year, and couldn't understand why that barely covered my expenses! $35000 is a lot of money! $110000 is a truckload!
(Thankfully, I'm in the OP's position this year, and I earned more than I spent on essential expenses... not so much last year, though.)
For the past few years, I've managed to earn more than I've spent, and have put a good portion of that money in savings.
If I should lose my job, I've got a significant cushion to survive on.
110K would make for a bigger cushion, though.
110K would make for a bigger cushion, though.
I'm a young guy who makes approximately that much, and I feel like I'm not getting very far either.
I moved from my hometown of Winnipeg, Canada to Silicon Valley to build my career. In moving, I tripled my salary. I am definitely better off financially for having moved, but my daily quality of life is lower. Here's some food for thought:
* HOUSING QUALITY AND COST. This is, bar none, the most important aspect of my currently feeling like I'm barely getting by. In Winnipeg, if you're roommating an apartment ~30 minutes bus from downtown, your rent will be around $300/mo. 1br to yourself will set you back $500-$1000 depending where you live. The fanciest 1br penthouse I could find was $1700. Personally, I lived in a rather 'expensive', nice 1br apartment that was in a trendy, gentrifying neighbourhood about 1.5 miles from my work downtown. It cost me $850/mo and that was a luxury. I could've gotten much cheaper if I wasn't so picky about location. Compare with SF: Housing here costs a fortune. And strict rent control + high paying jobs means that the housing they do build is marketed to high income people (read: twitter millionaires). So not only is nothing available in a reasonable price range, but there are many social factors that try to make $3500/mo studios sound normal. In SF, paying a similar percentage of my take-home income as I did in Winnipeg, I get a shitty, tiny, 'jr 1 bedroom' (~400sqft) apartment nestled between a noisy road and a freeway. I can walk to work, but it's 3 miles one way, and takes me through some areas I don't feel comfortable walking alone in.
Housing cost anchors everything else. In Winnipeg I'd be paying $300/mo for what I have and where I have it; in SF I pay $1600. My salary tripled; it didn't quintuple. And because housing costs are the anchor, it makes everything else more expensive by comparison
* KEEPING UP WITH THE HIGH-POWERED JONESES. Tech has a lot of young, rich people in it. And young rich people don't always make the wisest decisions. Consequently, there's a lot of conspicuous consumption going on. I feel like I can't afford to keep up, because I'm financially disciplined and highly value long term stability. I look at other people and assume they do the same. Perhaps they don't. Maybe they're spending 50% of their disposable income on cheap glasses, expensive jeans, and cocktails with PBR in them. I spend almost 50% of my disposable (post-living-expenses) income on savings. Appearances can be misleading, and if you don't consciously keep aware of this, it can be demoralizing
* A NEW NORMAL. I would say that, proportional to cost of living, my real income has not substantially risen by moving. However, it has inflated. And inflation is a good thing when compared against uninflated prices. For example, flights. A flight from YWG to SFO costs ~$700, regardless if I live in Winnipeg ($40k income, $400/mo) or SF ($120k income, $1600/mo rent). As a result, my day-to-day standard of life hasn't increased, but my ability to do things outside of my day to day has. When I lived in Winnipeg, I was unable to take more than one flight per year, anywhere (and I usually spent it on professional develoment-related things). Now, I think nothing of dropping a few hundred dollars to fly to a conference on a weekend. The same goes for nationally-marketed goods such as electronics. My rent might've gone waaay up, but an iphone costs $800USD regardless of where I live. It's easy to overlook this, because it is not a typical everyday thing.
* LONG TERM SAVINGS. This is a little bit more important for me, since I'm paying into SS but as a non-citizen, will never collect a dime. But savings. Savings don't really have an emotional feel to them. They're not tangible, they're just some numbers on pages. If you're pumping a lot of money into savings (like I am), it can feel like that is just money that's disappearing. But nothing could be farther from the truth. Many people live in the US month-to-month, and are one crisis away from bankruptcy. My parents both grew up in households like that. Hell, my parents' households are CURRENTLY like that. I, on the other hand, am squirreling away much of my money. I'm maxing my 401k, so that in my 60s I'll be ok. I'm building up some personal savings, to achieve some personal goals (largely investment related, with the purpose of rescuing me from wage slavery). These are very important things, but they FEEL like money that just disappears
I moved from my hometown of Winnipeg, Canada to Silicon Valley to build my career. In moving, I tripled my salary. I am definitely better off financially for having moved, but my daily quality of life is lower. Here's some food for thought:
* HOUSING QUALITY AND COST. This is, bar none, the most important aspect of my currently feeling like I'm barely getting by. In Winnipeg, if you're roommating an apartment ~30 minutes bus from downtown, your rent will be around $300/mo. 1br to yourself will set you back $500-$1000 depending where you live. The fanciest 1br penthouse I could find was $1700. Personally, I lived in a rather 'expensive', nice 1br apartment that was in a trendy, gentrifying neighbourhood about 1.5 miles from my work downtown. It cost me $850/mo and that was a luxury. I could've gotten much cheaper if I wasn't so picky about location. Compare with SF: Housing here costs a fortune. And strict rent control + high paying jobs means that the housing they do build is marketed to high income people (read: twitter millionaires). So not only is nothing available in a reasonable price range, but there are many social factors that try to make $3500/mo studios sound normal. In SF, paying a similar percentage of my take-home income as I did in Winnipeg, I get a shitty, tiny, 'jr 1 bedroom' (~400sqft) apartment nestled between a noisy road and a freeway. I can walk to work, but it's 3 miles one way, and takes me through some areas I don't feel comfortable walking alone in.
Housing cost anchors everything else. In Winnipeg I'd be paying $300/mo for what I have and where I have it; in SF I pay $1600. My salary tripled; it didn't quintuple. And because housing costs are the anchor, it makes everything else more expensive by comparison
* KEEPING UP WITH THE HIGH-POWERED JONESES. Tech has a lot of young, rich people in it. And young rich people don't always make the wisest decisions. Consequently, there's a lot of conspicuous consumption going on. I feel like I can't afford to keep up, because I'm financially disciplined and highly value long term stability. I look at other people and assume they do the same. Perhaps they don't. Maybe they're spending 50% of their disposable income on cheap glasses, expensive jeans, and cocktails with PBR in them. I spend almost 50% of my disposable (post-living-expenses) income on savings. Appearances can be misleading, and if you don't consciously keep aware of this, it can be demoralizing
* A NEW NORMAL. I would say that, proportional to cost of living, my real income has not substantially risen by moving. However, it has inflated. And inflation is a good thing when compared against uninflated prices. For example, flights. A flight from YWG to SFO costs ~$700, regardless if I live in Winnipeg ($40k income, $400/mo) or SF ($120k income, $1600/mo rent). As a result, my day-to-day standard of life hasn't increased, but my ability to do things outside of my day to day has. When I lived in Winnipeg, I was unable to take more than one flight per year, anywhere (and I usually spent it on professional develoment-related things). Now, I think nothing of dropping a few hundred dollars to fly to a conference on a weekend. The same goes for nationally-marketed goods such as electronics. My rent might've gone waaay up, but an iphone costs $800USD regardless of where I live. It's easy to overlook this, because it is not a typical everyday thing.
* LONG TERM SAVINGS. This is a little bit more important for me, since I'm paying into SS but as a non-citizen, will never collect a dime. But savings. Savings don't really have an emotional feel to them. They're not tangible, they're just some numbers on pages. If you're pumping a lot of money into savings (like I am), it can feel like that is just money that's disappearing. But nothing could be farther from the truth. Many people live in the US month-to-month, and are one crisis away from bankruptcy. My parents both grew up in households like that. Hell, my parents' households are CURRENTLY like that. I, on the other hand, am squirreling away much of my money. I'm maxing my 401k, so that in my 60s I'll be ok. I'm building up some personal savings, to achieve some personal goals (largely investment related, with the purpose of rescuing me from wage slavery). These are very important things, but they FEEL like money that just disappears
> It honestly feels like the goalposts keep moving
That's a really great quote and I'm happy to see the honesty. This gets to the heart of the matter.
You're stuck playing "keep up with the Jones'", which by very definition you can not win.
You need to define your own goalposts, then they won't move, and you can actually get there.
What makes you happy? How do you want to spend your limited time on this earth? What do you want to contribute to the world?
Make those things your "goalposts", not money, and you'll be much, much happier and better off.
That's a really great quote and I'm happy to see the honesty. This gets to the heart of the matter.
You're stuck playing "keep up with the Jones'", which by very definition you can not win.
You need to define your own goalposts, then they won't move, and you can actually get there.
What makes you happy? How do you want to spend your limited time on this earth? What do you want to contribute to the world?
Make those things your "goalposts", not money, and you'll be much, much happier and better off.
I think goalposts move by nature, even when you set them yourself. Once upon a time, my goalposts were "graduate college". Then they were, "get a good job". Then they were, "get healthy". Then, "build social circles".
These are moving goalposts. But without them, I would stagnate and achieve little.
These are moving goalposts. But without them, I would stagnate and achieve little.
Absolutely.
The key to this is you said "my" goalposts.
As long as you're living your life aiming for goalposts you set, they can be achievable. The problems arise when you try to achieve someone elses goal posts.
The key to this is you said "my" goalposts.
As long as you're living your life aiming for goalposts you set, they can be achievable. The problems arise when you try to achieve someone elses goal posts.
This is a fair point of view, and I kind of agree with it, but you overlook a very important question: Is he setting all the goalposts?
If the 'goalposts' are 'live in a studio apartment, pay for health/dental care, have heat and light and hot water', and the costs of THAT keep going up, what is he supposed to do about that? Will he be happier and better off if he gets an inferior health plan to save money? Obviously not.
If the 'goalposts' are 'live in a studio apartment, pay for health/dental care, have heat and light and hot water', and the costs of THAT keep going up, what is he supposed to do about that? Will he be happier and better off if he gets an inferior health plan to save money? Obviously not.
> If the 'goalposts' are 'live in a studio apartment, pay for health/dental care, have heat and light and hot water', and the costs of THAT keep going up, what is he supposed to do about that?
That's a very good point. If the world changes under your feet and makes it impossible to live with the quality of life you had or were aiming to have, I think your only option is to adjust your internal thinking so that you don't become unhappy.
That's a very good point. If the world changes under your feet and makes it impossible to live with the quality of life you had or were aiming to have, I think your only option is to adjust your internal thinking so that you don't become unhappy.
Three major issues I see
(1) People aren't saving enough [1].
For the past 50 years, Americans have come to expect their employers and/or government will finance their retirement, healthcare, unemployment, and other major dislocations, so personal savings became something one did with windfalls, but not on a regular, life-or-death basis. (My grandparents are fond of tellling me that in their childhood, people were "poor as church mice" before Social Security)
But these commitments are being tested as people are living longer, massive healthcare inflation is occurring, and the birth rate is falling, causing the ratio of wage-generating members of the US economy to constitute a shrinking portion of the population relative to retirees.
This also creates a problem because financial gains drive pensions, and absent capital accumulation, "normal" people (pensioners) can't participate in the upside of higher corporate profits and/or interest rates.
(2) Wages are stagnating. I don't know why this is happening, but suspect it's due in large part to globalization, in particular, better communication technologies being used to substitute cheaper labor for what was previously only available locally.
The decline of labor unions might be a good thing for owners, but it's unquestionably bad for wage-earners.
Also, more and more jobs are getting automated as technology gets better and better, which reduces the demand for unskilled labor.
(3) Major across-the-board inflation. Healthcare, fuel prices (which directly affect the cost of driving, flying, shipping, food production, pretty much everything), education costs, higher tax rates (Cook county, IL, where I grew up, has over 10% sales tax, a 5% state income tax, plus federal taxes -- not inflation as such, but it does have a big effect on depleting purchasing power), food -- EVERYTHING is costing more. "Six figure" incomes just aren't what they used to be.
I think the combination of no pensions + higher healthcare costs + more taxes (largely to fund government-sponsored retirement funds, not provide broad-based services like education/public works) + inflation is making 120k feel like 80k or less, it's just not that visible because in nominal terms, wages aren't going down.
[1] http://research.stlouisfed.org/publications/review/07/11/Gui...
(1) People aren't saving enough [1].
For the past 50 years, Americans have come to expect their employers and/or government will finance their retirement, healthcare, unemployment, and other major dislocations, so personal savings became something one did with windfalls, but not on a regular, life-or-death basis. (My grandparents are fond of tellling me that in their childhood, people were "poor as church mice" before Social Security)
But these commitments are being tested as people are living longer, massive healthcare inflation is occurring, and the birth rate is falling, causing the ratio of wage-generating members of the US economy to constitute a shrinking portion of the population relative to retirees.
This also creates a problem because financial gains drive pensions, and absent capital accumulation, "normal" people (pensioners) can't participate in the upside of higher corporate profits and/or interest rates.
(2) Wages are stagnating. I don't know why this is happening, but suspect it's due in large part to globalization, in particular, better communication technologies being used to substitute cheaper labor for what was previously only available locally.
The decline of labor unions might be a good thing for owners, but it's unquestionably bad for wage-earners.
Also, more and more jobs are getting automated as technology gets better and better, which reduces the demand for unskilled labor.
(3) Major across-the-board inflation. Healthcare, fuel prices (which directly affect the cost of driving, flying, shipping, food production, pretty much everything), education costs, higher tax rates (Cook county, IL, where I grew up, has over 10% sales tax, a 5% state income tax, plus federal taxes -- not inflation as such, but it does have a big effect on depleting purchasing power), food -- EVERYTHING is costing more. "Six figure" incomes just aren't what they used to be.
I think the combination of no pensions + higher healthcare costs + more taxes (largely to fund government-sponsored retirement funds, not provide broad-based services like education/public works) + inflation is making 120k feel like 80k or less, it's just not that visible because in nominal terms, wages aren't going down.
[1] http://research.stlouisfed.org/publications/review/07/11/Gui...
After World War II the world industrial base was either ruined or tooled up for wartime production. The great U.S. postwar boom lasted from 1945 to 1973, America was factory to the world during these years because it had huge advantages in workforce, industrial base, infrastructure, and money. Today the world has overcapacity in nearly all industries, margins are low, and cost cutting is the obligatory survival strategy.
The mass systems industrial revolution created the huge increases in wealth and wellbeing seen in the 20th century. This revolution began around 1900 when the marriage of science and industry was finally consummated, but it was mostly over by the 1990s. That means that there's minimal primary technological innovation now, so returns to investments in industry and infrastructure are nearly zero. The next industrial revolution is the robot revolution, but it's only just getting started now, all human systems will be transformed, and vast amounts of new wealth will be created in decades to come.
The world has been accumulating huge levels of debt for 25 years, this is debt that cannot possibly be repaid, but the accumulation is still continuing. Most of the world switched from industrial capitalism to financial capitalism (the capitalism of the Medici) in the 1990s with the end of the mass systems industrial revolution; one result is the rapid rise of oligarchies in many countries including the U.S., Russia, and China.
The mass systems industrial revolution created the huge increases in wealth and wellbeing seen in the 20th century. This revolution began around 1900 when the marriage of science and industry was finally consummated, but it was mostly over by the 1990s. That means that there's minimal primary technological innovation now, so returns to investments in industry and infrastructure are nearly zero. The next industrial revolution is the robot revolution, but it's only just getting started now, all human systems will be transformed, and vast amounts of new wealth will be created in decades to come.
The world has been accumulating huge levels of debt for 25 years, this is debt that cannot possibly be repaid, but the accumulation is still continuing. Most of the world switched from industrial capitalism to financial capitalism (the capitalism of the Medici) in the 1990s with the end of the mass systems industrial revolution; one result is the rapid rise of oligarchies in many countries including the U.S., Russia, and China.
I agree that many things are probably wrong with our economy that are affecting you. But what you said doesn't add up to me. Maybe there are many things chipping away at your wealth which you haven't been accounting for?
If $110k is your take-home (after taxes), you are single, and your expenses are so low, it seems you could be saving quite a lot. I know many people with similar income and expenses, and they save tens of thousands per year. This allows them to spread savings across IRAs, mutual funds, and regular savings accounts to build wealth.
Perhaps like many who make a ~100k range salary, you pay upwards of 30% of it to taxes? This is a huge chunk.
You drive; are you sure you haven't spent more on gas than you have on dental? You mentioned dental as your third biggest expense in the last two years. This seems unusual. Gas, food, and other common expenses often make up for a large portion of total expenses.
If your medical and dental expenses are that high, that's unfortunate. But you say you have some decent savings, so good for you! That shows you have the financial strength to make it through tough medical situations :)
If you have more savings than most people you know, maybe you shouldn't be feeling so pressured. Most people aren't "making it" because they have no savings--but you are!
Having debt is a common reason for feeling financially stressed. If you have debt, see a debt counselor or financial advisor and create a plan to get rid of it, fast. They may advise you to use a chunk of savings for eliminating debt.
You say you eat out "some of the time". Most people I know say that, and they mean "at least one meal per day". This is not good for your finances! I personally increased my monthly savings by 50% once I limited my takeout to once per week, cooking the rest of my meals myself.
Lots of times it helps to have a financial advisor. If you do this, spend plenty of time finding a good one who you're comfortable with, who listens to your concerns, etc.
Bottom line: track down where that $110k is disappearing to! You should feel comfortable at that salary. Especially over time, as you save and build wealth!
Hope this helps, or at least gives you some ideas.
If $110k is your take-home (after taxes), you are single, and your expenses are so low, it seems you could be saving quite a lot. I know many people with similar income and expenses, and they save tens of thousands per year. This allows them to spread savings across IRAs, mutual funds, and regular savings accounts to build wealth.
Perhaps like many who make a ~100k range salary, you pay upwards of 30% of it to taxes? This is a huge chunk.
You drive; are you sure you haven't spent more on gas than you have on dental? You mentioned dental as your third biggest expense in the last two years. This seems unusual. Gas, food, and other common expenses often make up for a large portion of total expenses.
If your medical and dental expenses are that high, that's unfortunate. But you say you have some decent savings, so good for you! That shows you have the financial strength to make it through tough medical situations :)
If you have more savings than most people you know, maybe you shouldn't be feeling so pressured. Most people aren't "making it" because they have no savings--but you are!
Having debt is a common reason for feeling financially stressed. If you have debt, see a debt counselor or financial advisor and create a plan to get rid of it, fast. They may advise you to use a chunk of savings for eliminating debt.
You say you eat out "some of the time". Most people I know say that, and they mean "at least one meal per day". This is not good for your finances! I personally increased my monthly savings by 50% once I limited my takeout to once per week, cooking the rest of my meals myself.
Lots of times it helps to have a financial advisor. If you do this, spend plenty of time finding a good one who you're comfortable with, who listens to your concerns, etc.
Bottom line: track down where that $110k is disappearing to! You should feel comfortable at that salary. Especially over time, as you save and build wealth!
Hope this helps, or at least gives you some ideas.
> You say you eat out "some of the time". Most people I know say that, and they mean "at least one meal per day". This is not good for your finances! I personally increased my monthly savings by 50% once I limited my takeout to once per week, cooking the rest of my meals myself.
I feel like I eat out less often than most other people I know. I budget for restaurants and stay within my budget. I buy lunch from a cafe or restaurant daily during the week, and eat out for dinner maybe once a week. I thought I was doing pretty well until I got my credit card statement summary for 2013.
Almost $7000 on restaurants / cafes / etc.
My fifth biggest category of spending (after Rent, Aggressive Car Payments ($1000/mo), Savings, and Healthcare, in order).
I feel like I eat out less often than most other people I know. I budget for restaurants and stay within my budget. I buy lunch from a cafe or restaurant daily during the week, and eat out for dinner maybe once a week. I thought I was doing pretty well until I got my credit card statement summary for 2013.
Almost $7000 on restaurants / cafes / etc.
My fifth biggest category of spending (after Rent, Aggressive Car Payments ($1000/mo), Savings, and Healthcare, in order).
I personally think it is just "Expectation vs Reality".
The government is in extreme debt. Debts have to be paid back. The problem with debt is that it does not leave freedom to do constructive things (like upgrading infrastructure).
Also, what you are feeling is a pinch of inequality. Average and median wages have been stagnant despite record profits of corporations. Tax codes have been changed to favor investments rather than plain old hard work.
So, while our "expectations" have been to just work and earn a good life like our grandparents, the "reality" does not facilitate the same.
Also, you're living the life most people just dream of. You're richer than most others.
The government is in extreme debt. Debts have to be paid back. The problem with debt is that it does not leave freedom to do constructive things (like upgrading infrastructure).
Also, what you are feeling is a pinch of inequality. Average and median wages have been stagnant despite record profits of corporations. Tax codes have been changed to favor investments rather than plain old hard work.
So, while our "expectations" have been to just work and earn a good life like our grandparents, the "reality" does not facilitate the same.
Also, you're living the life most people just dream of. You're richer than most others.
There are several levels to what is wrong.
I have dedicated the last 5 years to discovering what is going on so I will try my best to condense it down.
In terms of a 'shorter' business cycle view (less than 10 year perspective) to what is wrong is that we are not in a recession but in a deleverage. We haven't had one of those since WW2 so most people don't know what it is and think it is a recession. A deleverage is a once in a 100 year massive transfer of wealth event. I have put resources on what a deleverage is at the end of this reply.
The long term problem is that the Fed is a private bank. This means that the US Government and American citizens do not control the Fed. Forget the façade that makes them look like a branch of Government, especially the whole Presidential appointment of the Fed Chairman. It is a private bank that gets to print money and sell it to the US Government that American citizens are forced to use. That means that the US Government and American citizens are slaves with no control over their future. Each dollar printed is a debt burden on the American people and a debasement of the current currency value. Essentially think of printing money as a way that the Fed transfers wealth from your pocket into theirs. Furthermore, I believe that the Fed manipulates the economic cycle to create wealth transfer events that they reap the benefits of.
For further information look to the following:
https://www.youtube.com/watch?v=PHe0bXAIuk0
http://www.tullettprebon.com/documents/strategyinsights/tpsi...
www.youtube.com/watch?v=mII9NZ8MMVM
http://www.amazon.co.uk/How-Economy-Grows-Why-Crashes/dp/047...
http://www.imdb.com/title/tt1645089/
I have dedicated the last 5 years to discovering what is going on so I will try my best to condense it down.
In terms of a 'shorter' business cycle view (less than 10 year perspective) to what is wrong is that we are not in a recession but in a deleverage. We haven't had one of those since WW2 so most people don't know what it is and think it is a recession. A deleverage is a once in a 100 year massive transfer of wealth event. I have put resources on what a deleverage is at the end of this reply.
The long term problem is that the Fed is a private bank. This means that the US Government and American citizens do not control the Fed. Forget the façade that makes them look like a branch of Government, especially the whole Presidential appointment of the Fed Chairman. It is a private bank that gets to print money and sell it to the US Government that American citizens are forced to use. That means that the US Government and American citizens are slaves with no control over their future. Each dollar printed is a debt burden on the American people and a debasement of the current currency value. Essentially think of printing money as a way that the Fed transfers wealth from your pocket into theirs. Furthermore, I believe that the Fed manipulates the economic cycle to create wealth transfer events that they reap the benefits of.
For further information look to the following:
https://www.youtube.com/watch?v=PHe0bXAIuk0
http://www.tullettprebon.com/documents/strategyinsights/tpsi...
www.youtube.com/watch?v=mII9NZ8MMVM
http://www.amazon.co.uk/How-Economy-Grows-Why-Crashes/dp/047...
http://www.imdb.com/title/tt1645089/
1. Housing: Rent is all about location, location and location including supply and demand. The rent is high in some places because a group of customers are able to pay that exorbitant price be it in NY, SF or Seattle. You draw higher salary for that in those big cities. And I agree that rent/mortgage is a major chunk of a white collar job income(typically middle class).
2. Healthcare: With Obamacare, I am pretty optimistic that people will not be scared to stay hostage to their employer and the pre-existing conditions nightmare will end soon yada yada. But the healthcare in US is expensive because: higher prices for services themselves, higher costs to administer the system, or more utilization of these services. Also the health care system is "dysfunctional" because the system of third-party payments from insurers removes the patient as a major participant in the financial and medical choices that affect costs.
3. People are not given enough exposure on how to manage their finance. People have no clue about their personal finances till they are drowned with several debts(study loan, credit card etc) in their twenties and thirties.
In this consumerism society, the concept of buying and instant gratification is stronger than the concept of saving.
However somebody can start from here: 1. Spend less than you earn and start saving from the day you start making money.
2. Spend some time on net and find deals. There are some really good deals available for everything.
Just ex: You can get a phone plan for $10/month (unlimited talk and text no internet though) and $25/month(unlimited talk, text and data) from Republic wireless. Only caveat is, the plan is limited to android and you have to buy the phone for $299.00 upfront.
Few fellows have taken disciplined approach and retired in their thirties and forties.
http://rootofgood.com/about/
http://www.forbes.com/sites/laurashin/2013/10/03/how-mr-mone...
http://www.mrmoneymustache.com/
2. Healthcare: With Obamacare, I am pretty optimistic that people will not be scared to stay hostage to their employer and the pre-existing conditions nightmare will end soon yada yada. But the healthcare in US is expensive because: higher prices for services themselves, higher costs to administer the system, or more utilization of these services. Also the health care system is "dysfunctional" because the system of third-party payments from insurers removes the patient as a major participant in the financial and medical choices that affect costs.
3. People are not given enough exposure on how to manage their finance. People have no clue about their personal finances till they are drowned with several debts(study loan, credit card etc) in their twenties and thirties.
In this consumerism society, the concept of buying and instant gratification is stronger than the concept of saving.
However somebody can start from here: 1. Spend less than you earn and start saving from the day you start making money.
2. Spend some time on net and find deals. There are some really good deals available for everything.
Just ex: You can get a phone plan for $10/month (unlimited talk and text no internet though) and $25/month(unlimited talk, text and data) from Republic wireless. Only caveat is, the plan is limited to android and you have to buy the phone for $299.00 upfront.
Few fellows have taken disciplined approach and retired in their thirties and forties.
http://rootofgood.com/about/
http://www.forbes.com/sites/laurashin/2013/10/03/how-mr-mone...
http://www.mrmoneymustache.com/
Fundamentally, it's a rigged system.
http://www.youtube.com/embed/mII9NZ8MMVM
Get married. Sharing expenses and having meals at home more often could help you save more and this in turn could change your perception of life, universe and everything.
Maybe not your grandparents, but maybe their parents. Harry S. Truman could not actually afford a house until he was in national politics ( perhaps even POTUS; a quick Google didn't clear that up ). 100 to 40 years ago, people would only pay a year's pay, two years for a house.
A lot of the cost of housing is due to the 30 year fixed mortgage. When you subsidize something, it costs more and you get more of it.
A lot of the cost of housing is due to the 30 year fixed mortgage. When you subsidize something, it costs more and you get more of it.
> I feel under a lot of pressure all the time, and yet it seems I am not quite 'making it' financially or materially.
What is that supposed to mean?
What is that supposed to mean?
You're not supposed to save and houses are supposed to cost multiples of what you could possibly earn. Low interest rates for extended periods of time do that. Without getting overly critical of Fed policies, you can also trace a handful of the other issues in this thread to that.
The economy got shipped overseas.
A trickle at first but then like everything else the practice got optimized.
So the upper-end mostly survived. The low-end is being stepped on harder and harder to squeeze more profit out of labor, any way they can.
A trickle at first but then like everything else the practice got optimized.
So the upper-end mostly survived. The low-end is being stepped on harder and harder to squeeze more profit out of labor, any way they can.
[deleted](1)
As Beached says [1], this is all about your attitude, and how you're choosing to live in the world.
Remember, you live in the consumption capital of the world. More than ever, you're being bombarded from all sides at all times with ingenious advertising designed for the sole purpose of separating you from your money. Even your friends, family and colleagues are constantly encouraging you to spend more and more, even when they don't know they're doing it. You've been lied to your entire life - you've been told that spending ever-increasing amounts of money will make you happier and "better off" and it's plainly not true.
Why do companies advertise stuff? Solely to further their own agenda. It's not about you.
I just finished reading "Your Money or Your Life" [2] - an excellent book that walks through the steps needed to break out of the cycle you're stuck in. It's a little self-helpy, but the message is great, and if you follow the steps they outline, you'll absolutely be completely financially independent and won't need to go to work if you don't want to. Of course, you can if you do want to.
The tldr; is very simple - stop consuming so much stuff you don't need that isn't making you any happier, at which point you'll find you earn more money than you need, so you can work less and focus more on the things you want to, then you'll spend even less, etc. etc. etc. The amount of money you spend is directly related to the amount of time you must go to work. Spending is not what you want to be doing.
Find the things that make you happy, and focus on those. Spending money does not equal happiness, so stop playing that game.
From my personal perspective, I highly, highly, highly recommend taking a couple of years off to figure out what actually makes you tick. I spent two years driving Alaska->Argentina because I wanted to, and another friend that is unemployed right now has never been happier and more in touch with herself in her entire life. The first couple of months feel strange and awkward and lazy, etc. After a while, you become so busy with what makes you happy you can't imagine how you ever found time to go to work. Once you have that perspective, it's doubtful you'll feel happy consuming, because every time you do that, you have to work more.
[1] https://news.ycombinator.com/item?id=7315456
[2]http://www.amazon.ca/Your-Money-Life-Transforming-Relationsh...
EDIT: Just for fun, do an audit on how much you spend month-to-month. Include every single cent that you pay out. Cable, Internet, Cell phone, gas, car insurance, food, groceries, snacks, clothes, shoes, transport, entertainment, vacations, personal grooming, lifestyle things, etc. etc. etc. I guarantee you'll be shocked at how much money you're spending on crap you don't need, and didn't consciously know you were spending it on. I make a fraction of what you make, and I'm saving more than I ever have in my life, simply by being extremely conscious of all the crap I don't need to spend money on.
Remember, you live in the consumption capital of the world. More than ever, you're being bombarded from all sides at all times with ingenious advertising designed for the sole purpose of separating you from your money. Even your friends, family and colleagues are constantly encouraging you to spend more and more, even when they don't know they're doing it. You've been lied to your entire life - you've been told that spending ever-increasing amounts of money will make you happier and "better off" and it's plainly not true.
Why do companies advertise stuff? Solely to further their own agenda. It's not about you.
I just finished reading "Your Money or Your Life" [2] - an excellent book that walks through the steps needed to break out of the cycle you're stuck in. It's a little self-helpy, but the message is great, and if you follow the steps they outline, you'll absolutely be completely financially independent and won't need to go to work if you don't want to. Of course, you can if you do want to.
The tldr; is very simple - stop consuming so much stuff you don't need that isn't making you any happier, at which point you'll find you earn more money than you need, so you can work less and focus more on the things you want to, then you'll spend even less, etc. etc. etc. The amount of money you spend is directly related to the amount of time you must go to work. Spending is not what you want to be doing.
Find the things that make you happy, and focus on those. Spending money does not equal happiness, so stop playing that game.
From my personal perspective, I highly, highly, highly recommend taking a couple of years off to figure out what actually makes you tick. I spent two years driving Alaska->Argentina because I wanted to, and another friend that is unemployed right now has never been happier and more in touch with herself in her entire life. The first couple of months feel strange and awkward and lazy, etc. After a while, you become so busy with what makes you happy you can't imagine how you ever found time to go to work. Once you have that perspective, it's doubtful you'll feel happy consuming, because every time you do that, you have to work more.
[1] https://news.ycombinator.com/item?id=7315456
[2]http://www.amazon.ca/Your-Money-Life-Transforming-Relationsh...
EDIT: Just for fun, do an audit on how much you spend month-to-month. Include every single cent that you pay out. Cable, Internet, Cell phone, gas, car insurance, food, groceries, snacks, clothes, shoes, transport, entertainment, vacations, personal grooming, lifestyle things, etc. etc. etc. I guarantee you'll be shocked at how much money you're spending on crap you don't need, and didn't consciously know you were spending it on. I make a fraction of what you make, and I'm saving more than I ever have in my life, simply by being extremely conscious of all the crap I don't need to spend money on.
@grecy, do you follow Mr. Money Mustache? He is all about cutting costs in ways I'd have never thought of. His goal was to retire early, but it could be anything. This requires quite a bit of "badassitude" as he would say.
http://www.mrmoneymustache.com/
I'd also agree that taking some time off is very helpful. I took 1 year off to do some volunteering. It taught me to live a simpler life and respect for the dollar (when your income is 0 you make it work the way you can).
http://www.mrmoneymustache.com/
I'd also agree that taking some time off is very helpful. I took 1 year off to do some volunteering. It taught me to live a simpler life and respect for the dollar (when your income is 0 you make it work the way you can).
Yes, I love his attitude. I actually was going to quote this one [1] in my reply
[1] http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...
[1] http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...
I like frugality, but rushing to live on a fixed income seems like a big mistake. People on fixed incomes are especially sensitive to externalities such as assuming their investment returns will outpace increases in prices and taxes.
For example, if increasing capital gains taxes or introducing a consumption tax become popular, people living frugally on modest investment incomes will be hard-hit. Considering that someone in his thirties could easily live another 50 years, it's hard to adjust retirement savings goals to match that sort of risk.
On top of that, careers are the biggest investments of most people. The idea of abandoning that investment and assuming the risks of a fixed income lifestyle seems half-baked to me.
Anyway, that being said, I like his attitude and tips on spending, at least when he isn't spending inordinate amounts of time on something to save a few bucks.
For example, if increasing capital gains taxes or introducing a consumption tax become popular, people living frugally on modest investment incomes will be hard-hit. Considering that someone in his thirties could easily live another 50 years, it's hard to adjust retirement savings goals to match that sort of risk.
On top of that, careers are the biggest investments of most people. The idea of abandoning that investment and assuming the risks of a fixed income lifestyle seems half-baked to me.
Anyway, that being said, I like his attitude and tips on spending, at least when he isn't spending inordinate amounts of time on something to save a few bucks.
> Rushing to live on a fixed income seems like a big mistake
And you've missed the entire point.
The point is to live on a fixed income if you want, for however long you want. If you don't want to, just pickup some work and supplement that fixed income.
Choice and options is the point.
And you've missed the entire point.
The point is to live on a fixed income if you want, for however long you want. If you don't want to, just pickup some work and supplement that fixed income.
Choice and options is the point.
I understand that point, and to rephrase my objection, I am concerned that people are accidentally trading long term choice for short term choice. There are many aspects of living within one's means that are out of the control of the individual.
For example, if a young person retired 20 years ago, he probably would have done a poor job budgeting for increases in prices for healthcare, especially given what the individual market looks these days. If, after a twenty year absence from the workforce, he is forced to work again, he will rapidly be approaching traditional retirement age with a large gap in work history and limited career options.
Maybe working or volunteering on the side can keep his skills sharp, but how easy will it be to convince potential employers of that fact?
It's possible that people are saying "retirement" when they mean "frequent sabbaticals", in which case, some better labeling of that lifestyle choice would clear up my confusion. Even then, I wouldn't blame a potential employer for being wary to give challenging job openings to sabbatical-takers due to the higher risk that they'll take off.
For example, if a young person retired 20 years ago, he probably would have done a poor job budgeting for increases in prices for healthcare, especially given what the individual market looks these days. If, after a twenty year absence from the workforce, he is forced to work again, he will rapidly be approaching traditional retirement age with a large gap in work history and limited career options.
Maybe working or volunteering on the side can keep his skills sharp, but how easy will it be to convince potential employers of that fact?
It's possible that people are saying "retirement" when they mean "frequent sabbaticals", in which case, some better labeling of that lifestyle choice would clear up my confusion. Even then, I wouldn't blame a potential employer for being wary to give challenging job openings to sabbatical-takers due to the higher risk that they'll take off.
I love your message here, though it's amusing that you recommend buying something as the cure to buying too much.
Another interesting data point to support taking some time off is the increased security of students who have taken "gap years" before starting college. In my experience they're almost all much happier, more thoughtful people pursuing what they'd really like to do in life rather than your average college student who's there because his parents told him to be (like me and most of my peers in college).
Another interesting data point to support taking some time off is the increased security of students who have taken "gap years" before starting college. In my experience they're almost all much happier, more thoughtful people pursuing what they'd really like to do in life rather than your average college student who's there because his parents told him to be (like me and most of my peers in college).
> though it's amusing that you recommend buying something as the cure to buying too much.
You mean the book?
I borrowed it from my local library, you should too :)
You mean the book?
I borrowed it from my local library, you should too :)
OP said he's not looking for advice and thinks his situation isn't utterly terrible. His description sounds fairly frugal. Are you suggesting that he stop spending a single cent on discretionary things and just live on rice and beans?
Saying his problem is living in Seattle misses the point. Many people can't afford to move someplace cheaper even if they wanted to, which is a real problem - he can afford to move, probably, but other people cannot, and he's asking about problems like that.
Saying his problem is living in Seattle misses the point. Many people can't afford to move someplace cheaper even if they wanted to, which is a real problem - he can afford to move, probably, but other people cannot, and he's asking about problems like that.
> Are you suggesting that he stop spending a single cent on discretionary things and just live on rice and beans?
Of course not, don't be ridiculous. Stop being so black-and-white (as my friends always say to Engineer me)
I'm suggesting he take a close look at how much he's spending on what, and if those things are actually making him happy. He needs Cut out or reduce spending on things that are not actually improving his happiness, and he'll have a lot more money than he thought.
At no point am I saying spend so little money you're in misery.
Of course not, don't be ridiculous. Stop being so black-and-white (as my friends always say to Engineer me)
I'm suggesting he take a close look at how much he's spending on what, and if those things are actually making him happy. He needs Cut out or reduce spending on things that are not actually improving his happiness, and he'll have a lot more money than he thought.
At no point am I saying spend so little money you're in misery.
He never said he's spending more than he's making, or that he's failing to save money. He asked about why things aren't better than they are, and whether things are that way for everyone else.
Telling him to cut costs is absolutely absurd. He didn't ask for advice and he didn't say his costs are extreme.
Telling him to cut costs is absolutely absurd. He didn't ask for advice and he didn't say his costs are extreme.
> He never said he's spending more than he's making, or that he's failing to save money.
Which has nothing to do with anything. He doesn't feel financially well-off or stable, so obviously he's not happy with his earnings to savings ratio.
> He asked about why things aren't better than they are
And my perspective and advice is that things are better than he thinks they are, he just needs to adjust his attitude.
> Telling him to cut costs is absolutely absurd. He didn't ask for advice
Obviously you're welcome to your opinion and me mine. If you don't like my advice you can always down vote it. Cutting costs is actually extremely sound advice for someone that doesn't feel financially "well off" or stable. He admits elsewhere in the thread "I feel like the goalposts keep moving".
> He didn't say his costs are extreme
Nobody that's not entirely satisfied money-wise thinks their expenses are extreme. That's the whole point.
Which has nothing to do with anything. He doesn't feel financially well-off or stable, so obviously he's not happy with his earnings to savings ratio.
> He asked about why things aren't better than they are
And my perspective and advice is that things are better than he thinks they are, he just needs to adjust his attitude.
> Telling him to cut costs is absolutely absurd. He didn't ask for advice
Obviously you're welcome to your opinion and me mine. If you don't like my advice you can always down vote it. Cutting costs is actually extremely sound advice for someone that doesn't feel financially "well off" or stable. He admits elsewhere in the thread "I feel like the goalposts keep moving".
> He didn't say his costs are extreme
Nobody that's not entirely satisfied money-wise thinks their expenses are extreme. That's the whole point.
He didn't complain about his wages, and he made it clear that he is not spending excessively. His lifestyle sounds fairly frugal by modern standards. He didn't even express discontent money-wise, as in 'I wish I made more money'. He's clearly expressing a general sense of uncertainty about why the economy is how it is, and why costs are how they are.
Also, he asked about other people and you're saying he needs to adjust HIS attitude? What does that do for everyone else? Do they all just need to adjust their attitudes and accept their lots in life?
The goalposts moving doesn't mean he's setting the goalposts for himself; if anything, it implies the opposite: Someone else is setting the goalposts. If those goalposts are essential (rent, health care, food)... what is he supposed to do?
Also, he asked about other people and you're saying he needs to adjust HIS attitude? What does that do for everyone else? Do they all just need to adjust their attitudes and accept their lots in life?
The goalposts moving doesn't mean he's setting the goalposts for himself; if anything, it implies the opposite: Someone else is setting the goalposts. If those goalposts are essential (rent, health care, food)... what is he supposed to do?
> He made it clear that he is not spending excessively.
Of course he thinks that he as to. As others have pointed out, he's making $110k a year and not happy with how much he has, it's pretty likely he's spending too much, or he just has unrealistic expectations.
> His lifestyle sounds fairly frugal by modern standards
You mean modern standards that set the goal posts we should all own x,y,z ? If you didn't know already, those "modern standards" you refer to are the problem here.
> What does that do for everyone else? Do they all just need to adjust their attitudes and accept their lots in life?
Attitude and spending. And plenty more things too. Read the book I recommended.
> If those goalposts are essential (rent, health care, food)... what is he supposed to do?
If you're trying to say for one second that someone making $110k a year can't pay for those "essentials", you're not being productive here.
Let's go with the case of someone earning $30k who's can't afford those - which I think is a realistic scenario. In that case, then the only option is to adjust ones expectations and personal goal posts to fit reality. Hypothetically, if the economy completely dies tomorrow (a la Germany, USSR or Argentina every ~10 years) will you be horribly unhappy you can no longer own your own car and are forced to take public transport, and must downsize your house to a small apartment, etc. etc.?
If you are unhappy with that, then you're basing your happiness on external factors outside your control (the economy) and you're setting yourself up to be a very unhappy person.
Of course he thinks that he as to. As others have pointed out, he's making $110k a year and not happy with how much he has, it's pretty likely he's spending too much, or he just has unrealistic expectations.
> His lifestyle sounds fairly frugal by modern standards
You mean modern standards that set the goal posts we should all own x,y,z ? If you didn't know already, those "modern standards" you refer to are the problem here.
> What does that do for everyone else? Do they all just need to adjust their attitudes and accept their lots in life?
Attitude and spending. And plenty more things too. Read the book I recommended.
> If those goalposts are essential (rent, health care, food)... what is he supposed to do?
If you're trying to say for one second that someone making $110k a year can't pay for those "essentials", you're not being productive here.
Let's go with the case of someone earning $30k who's can't afford those - which I think is a realistic scenario. In that case, then the only option is to adjust ones expectations and personal goal posts to fit reality. Hypothetically, if the economy completely dies tomorrow (a la Germany, USSR or Argentina every ~10 years) will you be horribly unhappy you can no longer own your own car and are forced to take public transport, and must downsize your house to a small apartment, etc. etc.?
If you are unhappy with that, then you're basing your happiness on external factors outside your control (the economy) and you're setting yourself up to be a very unhappy person.
I didn't think it was possible to drive from Alaska to Argentina. How did you cross the Darién Gap?
https://en.wikipedia.org/wiki/Darién_Gap
https://en.wikipedia.org/wiki/Darién_Gap
I drove the Jeep into a Shipping container and shipped it from Colon, Panama to Cartegena, Colombia.
http://theroadchoseme.com/shipping-across-the-darien-gap-pt-...
http://theroadchoseme.com/shipping-across-the-darien-gap-pt-...
A couple things. I am not here to complain about my lot in life, or seek advice. I understand that I'm better off than most. I realize it is unavoidable that some people will argue that the economy is better than ever, and it's all about personal responsibility. I accept that - I can just ignore those comments.
The only people I know who seem to be comfortable and have their financial lives in order have had steady, high middle-management type positions for a long time. They're a small minority of the people I know.
My question is, what is the problem, really? I am fairly sure this is not the type of situation my grandparents lived in. I feel under a lot of pressure all the time, and yet it seems I am not quite 'making it' financially or materially. Is that how it is for everybody? Is something wrong with the economy, or is this just how the human hierarchy has always worked? Is it me, the country, the region, the times, or everything, or nothing?