How do people afford to live?

[Old One]

Treebore,

Glad to hear things are lookin' up (at least on the Army/VA/SS continum)...continued well wishes on getting that whole issue hashed out!

~ OO

 

[kenobi65]

You probably don't live within 100 miles of Chicago, do you?

We rent a small 70 year-old, 2 bedroom, 1 bathroom house in a nice neighborhood about 40 miles west of Chicago. Four years ago, it was appraised at about $190,000.

No kidding. We live in Brookfield (just west of Chicago), and I was astounded at (a) how much it cost to buy our house in 1996, and (b) how much it's worth now.

My parents live in Green Bay, about 3 hours north of us, in a house with twice the square feet...but that is "worth" less than ours.

Location, location, location.

 

[Old One]

My advice on the secret to wealth: be a DINK.

Dual-
Income,
No
Kids



On a more serious note, my (few) financial secrets include: buy used cars instead of new, with cash if you can; pay off any credit cards you can as soon as you can and then pay off your entire bill every month; stay away from expensive hobbies; money spent on exercise is a good investment (to a point); refinance your mortgage if you haven't recently; eat at home more than you eat out (that's one I often fail to do!).

Wisdom! Wisdom!

Kids are darn expensive (but they sure are cute )!

The second half of Mr. Noah's post is spot on. The easiest way to great wealth (after winning the lottery or marrying into it) is living below your means. A good buddy of mine who is a banker (I work as a financial planner) call Americans between 18-55 "The Fast Food Generation(s)" - meaning everyone wants things "hot, fast and now"!

Don't have the money in the checking account? Just put it on credit ! Credit cards, consumer debt and buying brand-new cars are all huge wealth-killers.

Back to the original questions, most people earning those kind of incomes don't fall into them. They have either worked their way up through the ranks (working 70-80 hour+ weeks along the way), have one or more advanced business related degrees (MBA, eMBA, MHA, etc) or some combination thereof.

~ OO

 

[GlassJaw]

The easiest way to great wealth (after winning the lottery or marrying into it) is living below your means.

Well what's the point of having money if you don't enjoy it? I'd rather have a nice car and enjoy but have another monthy payment than drive around in an s-box. You only live once and you can't take it with you.

 

[Old One]

Well what's the point of having money if you don't enjoy it? I'd rather have a nice car and enjoy but have another monthy payment than drive around in an s-box. You only live once and you can't take it with you.

Actually, I am a big fan of enjoying the money you have. Life is short - you only go around once - it only costs a little more to go first-class, etc. I drive a nice car, take nice vacations and enjoy a relatively high standard of living (by national standards)...but I do it with money I have.

What I am not a big fan of is enjoying money you don't have. Maxed-out credit cards, living paycheck-to-paycheck, buying cars on 5, 6, 7 and 8-year notes (where the car is depreciating far faster than you pay it off) and always having too much month for the money is how many Americans live. Fine way to go if you want to be a perpetual debtor and never have 2 nickles to rub together. Not my cup of tea.

Start saving $250 per month at age 25 and you end up with ~ $872,000 at age 65 (assuming 8% annually). Wait until age 35 to start saving because you want to use the extra $250 per month for clubbing, clothes or auto-bling and you end up with only ~ $372,000. That's a $500,000 opportunity cost...maybe worth it for some...not worth it to me.

~ OO

 

[IcyCool]

Algebra is fun.

A thesis.

Women take time and money. (women = time * money)

Time is money. (time = money)

Therefore women take money and money. (women = money^2)

Money is the root of all evil. (money = squareroot of evil; if we square both sides of the equation, we get: money ^2 = evil)

Therefore women are evil. (women = evil)

This, while entertaining, is mathematically incorrect. The mathematical equivalent of and is addition, not multiplication. So you wind up with women = 2*(evil)^1.5, which isn't nearly as funny.

 

[der_kluge]

This, while entertaining, is mathematically incorrect. The mathematical equivalent of and is addition, not multiplication. So you wind up with women = 2*(evil)^1.5, which isn't nearly as funny.

But still funny. Unless you're a women, I s'pose.

 

[GlassJaw]

What I am not a big fan of is enjoying money you don't have. Maxed-out credit cards, living paycheck-to-paycheck, buying cars on 5, 6, 7 and 8-year notes

Couldn't agree more. I've been doing this since I got out of college.

The car loan thing boggles my mind. If you have to take out a 5+ year loan on a car, you probably can't afford it. I don't look at loans as how much I'll pay per month for X years. I look at them as how much over my monthly payment can I pay so I can pay the loan off faster.

Same with credit cards. IMO, you should never put something on your credit card that you couldn't pay off all at once if you had to.

 

[Desdichado]

The car loan thing boggles my mind. If you have to take out a 5+ year loan on a car, you probably can't afford it. I don't look at loans as how much I'll pay per month for X years. I look at them as how much over my monthly payment can I pay so I can pay the loan off faster.

But sometimes short term cash flow is more important that overall cash outlay. And if the short-term cash flow is significantly different enough, and you're smart enough, you can still turn that around into a net positive overall cash position too.

I don't get the "it depreciates faster than you can pay for it" line though -- to me, cars aren't an investment, they're a tool. You buy them to use them, not to resell them. I've had my current car for ten years, and I intend to drive it for at least several years more.

 

[Ace]

This is why my long-term plan includes moving to western North Dakota. Inexpensive, secluded, and the perfect place for hermit-types like me. I'd much rather structure my life around living 50-100 miles from a city than being in the middle of a city. If I had my way I wouldn't leave my place more than once a month.

No face to face gaming eh?

As for living well -- most people don't -- globally most people live in abject misery. Even those that don't (say in the US) have problems --

Let me use the US for an example

To live well -- say as well proportionatly as well as someone did in 1968 -- with a nice house and a car takes 2 incomes --

Someone who is 27 should reasonably be expected to have enough wealth to start a family. Many do not -- it can cost up to $25 to 50K US (including opportunity costs) to raise a child per year -- I do not think it is entitlement to expect the same percentage of the national "pie" as you parents got . heck in many cases the better educatated are making less too

wages for a lot of jobs - heck even the minimum wageare about 1/3 less than at peak (1968)

from Common Dreams.org (minus political bits) and adjusted for 2005 Dollars

In recent decades, the minimum wage floor has fallen, dragging down average real wages as well. The real value of the minimum wage peaked in 1968 at $7.92 per hour (in 2000 dollars). Since then, worker productivity went up, but wages went down. Productivity grew 74.2 percent between 1968 and 2000, but hourly wages for average workers fell 3 percent, adjusting for inflation. Real wages for minimum wage workers--two-thirds of whom are adults--fell 35 percent.

If wages had kept pace with rising productivity since 1968, the average hourly wage would have been $27.27 in 2000, rather than $15.95 (Bureau of labor stats) . The minimum wage would be $8.84--not $5.75. (most recent stats )

SNIP
The minimum wage would be $13.02 if had kept pace with domestic profits and $20.46 if it had risen with retail profits. (as of 2000)

CEO pay went up, but workers' wages went down. In 1980, the average CEO at a major corporation made as much as 97 minimum wage workers.


In 2000, they made as much as 1,223 minimum wage workers.


(END Common Dreams material) (my add on) I don't what 2005 stats are

Basically you and the wife are making what just you or the wife would have made --

What makes this sting less is low prices for certain goods (do to manufacturing efficiency) and easy credit

Basically most American properity is an illusion , you only seem you seem to have about as much as the past generation. In reality you have 1/3 to 1/2 less

If you were relativly as prosperous as you were in 1968 in terms of percent of the total national "pie" the fairly ludicrous figures in that Forbes article would be what the two of you would be making with college degrees

As it is the US will undergo a major major contraction with 10-15 (IMNSHO) unless we get another computer revolution like the one spared us the last contraction--

Apologies in advance to the mods if it goes too political --

This will be caused by the energy supply peak, foreign competition who don't buy our goods that produce jobs, out sourcing and horribly enough by a great increase in manufacturing efficiency --

In the current US system much propsperity has folowed to the corporation or the very rich and relatively little to Joe Average

Cultural barriers and (probably) international affairs issues

As far as living well -- shrug -- In your kids generation (9anyone say 20 or so) if you work for someone else outside of a few trades (not yet outsourced) the best you can hope for 3 meals, shelter and clothes -- maybe

If you want propsperity you either have to innovate or work for youself (as Phil does at least in part)