[ClubOfRomeII]

$this->bbcode_second_pass_quote('kenohio', '
')It might not be obvious yet, but I think for a lot of us we will soon find that we can no longer keep up with our delusion that we are middle class.

[thuja]

Great- your old CORII- you have seniority and you got into the pyramid scheme first. Now your children and the firneds of your children are screwed. It costs 50,000 dollars just for a 20% downpayment on a modest house. What working class joe can build up that kind of bankroll. They can't. But they get suckered into the ARMs, the exotic mortgages, the no money down. And then when the wizard draws back the curtains and the scheme is revealed, they lose all...foreclosure, bankruptcy. Its their fault right...no spare me the reponse I'll write it myself... here goes.



They don't have to buy a house. They can rent and scrimp and save like I did in my days. I worked two jobs and made enough money to buy a small house. And then I got better jobs and made a mint when I sold my house after my neighborhood gentrified. I also made a mint because I happened to live through the stock market expansion of the 90's so I'm set for retirment. Poor people could do the same if they just used a little old thing called elbow grease and good old fashioned American ambition!!

[WildRose]

$this->bbcode_second_pass_quote('drew', '.') We do eat a pile of meat though; I bet it is 20 or 30 bucks a week easily. We buy cheaper cuts mostly because we have a slow cooker which works miracles. Steak is an occasional treat since it would be 30 bucks for just one meal.

[WildRose]

$this->bbcode_second_pass_quote('kenohio', '
')That has led many people that were accustomed to having a middle class income and lifestyle to slip out of the middle class, even if they don't really realize the fact. It happens slowly as their wages stay the same but the prices of everything around them move up. Gradually their paychecks just don't go as far as they used to go, and if they want to continue living at the same level they were accustomed to they must either earn more money or borrow to fill in the gaps between earnings and expenditures.

[WildRose]

$this->bbcode_second_pass_quote('thuja', ' ') It costs 50,000 dollars just for a 20% downpayment on a modest house. What working class joe can build up that kind of bankroll. They can't. But they get suckered into the ARMs, the exotic mortgages, the no money down. And then when the wizard draws back the curtains and the scheme is revealed, they lose all...foreclosure, bankruptcy.

[kenohio]

$this->bbcode_second_pass_quote('WildRose', '
')
I agree with not biting off more than one can chew, but I can see how easily the dilemma can develop for young people today. How can you save money for a downpayment when you have to pay back student loans and somehow afford the rising costs of living, which will affect you even as you live in a small apartment and try to save money? It seems that the only way a young couple can start out without huge debt is if they have a big hand up from their parents, and I know that's impossible in most cases.

[ClubOfRomeII]

$this->bbcode_second_pass_quote('thuja', 'G')reat- your old CORII- you have seniority and you got into the pyramid scheme first.

[drew]

Bully for you, Club of Rome. You are lucky you had some forsight. The point is though, overall, the middle class is harder to maintain. Not everyone can be chiefs, there has to be braves too. (sorry everyone for the bad bad cliche')

A working man could support his family on one income in the sixties. Now two incomes are required; that is a pretty marked change.

I work in the blue collar sector and see job ads paying the exact same wage I was making 16 years ago for the same position. Luckily I have switched gears to a degree and am working in a profession with an extreme labour shortage. I feel very sorry for those with no education or marketable skills. It must be tough trying to survive on minimum wage.

Overall there has been less than 20 % growth in wages in my area over the past decade and a half. A decent factory job payed between 12 and 16 bucks an hour then and pays maybe as high as the low twenties now. 8, 10 or 12 buck/hr jobs are a dime a dozen. What is worse is the fact that most of these jobs are through a temp agency; zero job security!

I know some of my kids will return, or not leave our nest until they have a sizable down payment. They are well aware of how money works. Luckily me and the missus really like our kids.

As for inflation, everyone has to be feeling that pinch too, unless one is buying computers or electronics. Motorcycles have doubled in price in the last couple of decades, although I suppose one is getting way more bang for the buck now. (I was a road racer) Housing is through the roof as are the little things. I noticed too, Wildrose, how much of my grocery bill is BS things like toothpaste, vitamins, laundry detergent, etc. Food is still cheap in comparison; however each of these items seems to add about 10 bucks to the bill.

I know one thing, it sure as hell isn't getting easier, and I'm one of the lucky ones!

Drew

[Tyler_JC]

http://karmak.org/archive/2004/04/incom ... h97pie.gif

There you go.

1% own 39% of the stuff.

[WildRose]

$this->bbcode_second_pass_quote('ClubOfRomeII', 'I') am 41, and never in my life have I bought into a pyramid scheme. Or gotten a mortgage for a house I might add.

[Revi]

We went to pick up commodities for a soup kitchen we help out yesterday and heard something very scary. The guy who runs the place and picks up food for all the local food pantries says that almost every place in the state is practically out of food. The number of people needing food is up, and the amount of food is down. People are coming that never came before. They are the working poor. They can't make ends meet now, and we aren't even into the heating season. It's getting bad out there.

The really scary part is that we aren't too far behind the working poor. I noticed that even with all the conservation and efficiency we have done, the bills still come up to what we make every month and sometimes more. We're next...

[WildRose]

$this->bbcode_second_pass_quote('kenohio', '')$this->bbcode_second_pass_quote('WildRose', '
')
I agree with not biting off more than one can chew, but I can see how easily the dilemma can develop for young people today. How can you save money for a downpayment when you have to pay back student loans and somehow afford the rising costs of living, which will affect you even as you live in a small apartment and try to save money? It seems that the only way a young couple can start out without huge debt is if they have a big hand up from their parents, and I know that's impossible in most cases.

[WildRose]

$this->bbcode_second_pass_quote('drew', '
')I know some of my kids will return, or not leave our nest until they have a sizable down payment. They are well aware of how money works. Luckily me and the missus really like our kids.

[ClubOfRomeII]

$this->bbcode_second_pass_quote('WildRose', '')$this->bbcode_second_pass_quote('ClubOfRomeII', 'I') am 41, and never in my life have I bought into a pyramid scheme. Or gotten a mortgage for a house I might add.

[Denny]

$this->bbcode_second_pass_quote('ClubOfRomeII', '
')
Always rented. Always will.

[ClubOfRomeII]

$this->bbcode_second_pass_quote('Denny', '')$this->bbcode_second_pass_quote('ClubOfRomeII', '
')
Always rented. Always will.

[Revi]

There are lots of ways of living. I like owning a house that doesn't cost much to keep going. Soon we will only have to pay the water bill, the taxes and maintenance. That's security. The world may go crackerdog, but we can still get around the house on PV solar, take a bath with solar hot water and eat stuff from the garden. We get our wood from our woodlot, and maple syrup in the spring, so if we can still get a bag of flour we can make pancakes on the woodstove. We're walking distance to downtown and we're building a solar car to get around. Here's the website:

www.sunnev.com

It should be fun!

[Vexed]

I read this thread right up to your post Thuja, and I have to say it slapped me across the head.

$this->bbcode_second_pass_quote('thuja', 'S')o how about an example. A young family purchases a very modest 220,000$ home out West somewhere. Its about 1300 square feet and has 3 bedrooms and 1.5 bathrooms. They have saved up 20,000$ so they have a 200,000$ mortgage. With mortgage insurance, homeowners insurance and property taxes, they will pay about 1500$ a month. Utilities and phone costs another 300 a month on average. Food costs about 600$ a month, and they only have one car. The car payment is 250 $ a month. Dad and mom both went to college and have 4 year degrees. They also have 50,000$ in school debt. Thats another 300 a month for the next 10 years. There are daycare costs of 600$ a month while both parents work (and that is a low estimate). They want to put aside money for retirement and try to put aside 400$ a month. They will need 150$ a month for gasoline. Finally they need at least 500$ a month for miscelaneous expendables. This includes when the car breaks down, Christmas presents, haircuts, new clothes, books for the kids, dinner out twice a month, etc. So here's the whole tab.

Mortgage+insurance/taxes= 1500$
Utilities= 300$
Food= 600$
Car payment= 250$
School debt= 300$
Daycare= 600$
Retirement= 400$
Gas for car= 150$
Miscellaneous= 500$


Total= 4600$

With taxes they need to have about 5800$ gross to come up with 4600 net. Lets round up to 6000 $ net a month and say they need about 72,000$ a year to live a very modest middle class life. We haven't even mentioned plasma TVs, vacations, trips to the parents on the other coast, etc.

Both need to earn about 36,000 a year. There's a number of jobs that earn more than that but most require post graduate degrees. Going back to school for one of them would cripple them with debt while they are trying to "get ahead". And if one of them gets sick, injured or disabled, its lights out...head to bankruptcy court.

ClubofRomeII...please read the Two Parent Trap. 35 years ago, a family could survive on the wages of one bread earner- the Dad. Today, its nearly impossible to survive on two incomes. Don't talk to me about electronic gadgets...you haven't thought it through.

[Denny]

Vexed, I think you are on the right track there. I think for a couple, without children, you keep a lot of flexiblility by not owning a residence.

Your only downside risk is being outside the loop as real estate rises in value. But, if you invest well, you can overcome that too. For instance having a good share of your investment in REIT's. Which also reduces the investment income tax load.

Making interest, instead of paying it, is smart. Not to brag, but that is the same philosophy my wife and I used in our first couple of years.

We finally did buy a smaller home, but we were able to pay half the principal cost of it upfront, and we had an open mortgage and we put every bit of overtime money I made into estinguishing that, which I was able to do 3.5 years later. And, by then, my first born had come along, and my wife stayed home full time. We camped for our vacations. My wife drove a 13 year old car that I learned to repair, often, but not always that well. We used a wringer washing machine, and had no VCR or even a dishwasher for those years while we had the mortgage. Mind you back then, a VCR cost about $500, like about $1,000 today. And, I would not change it for the world. It was an adventure, and gave me a sense of accomplishment to follow this path. I was also blessed with a wife who had good common sense and few materialistic ambitions.

Two years later, I saved up enough to do a cash deal on a larger four bedroom home. So, we have lived mortgage free for about 22 years now. And, in addition to a free and clear home, I have enough retirement savings to earn about $30K a year, right now, if I parked the savings in a mix of income trusts.

[mmasters]

$this->bbcode_second_pass_quote('Tyler_JC', 'h')ttp://karmak.org/archive/2004/04/income&wealth_files/wealth97pie.gif

There you go.

1% own 39% of the stuff.