I was one of the many that loss their job in the end of 2008. Fortunately my mortgage is low. A lot of people tend to purchase beyond their means and needs that when something bad happen they get screwed. I have this rule of thumb when it comes to buying a house, " Never buy more that 3x your salary." Example, if you make $50k/yr, keep your house at $150k or slightly lower. That house was too big for their means.
shareDo 4-bedroom houses even exist at $150k? That are not in some sort of ghetto?
http://www.maxloh.com/
Yes there are some avaliable in nice areas with the lower cost of homes in this economy
shareIn the midwest in small/medium size towns. I know people who have bought or build 3 bedroom homes in good condition for under 100k. It isn't possible in a high population density urban area though.
shareSure, look in realtor.com and for homes in the midwest. Indiana and Ohio just to name two.
shareYou can get a good house in a good area for $150K in a KC burb.
shareSeriously? No. It depends where you live and most houses right now (where I live) are under 100k and in great neighborhoods. I got mine for 80k. The economy has screwed a lot of people and so they're selling their homes for dirt cheap.
shareI was thinking the same thing as I was watching this film. If I made $120,000 a year and had two kids then I'd live in a simple house with two American made cars and not a lot of fancy overhead. I felt bad for his family as he continued to try and live out his rich fantasy with the Porche and country club dues.
"It is so hard to get good help these days!" -Al Swearengen
I agree they were living kind of excessively, though that was clearly a commentary on people in that kind position, but as to the home part even 'simple homes' cost in the $300k range here in the Boston area where the film takes place.
shareIt's all about making choices. $300k for a home is not cheap, but if he had already been working in a job making $80k a year and she was working full-time in a job making even as little as $40k a year, they would have had a household income of $120k just as a base salary. Assuming a 20% down on a job, they could have afforded a $300k home and saved money.
I have a friend who owns a landscaping business. He told me he has some customers who live in multi-million dollar homes and have been downsized. I thought he was going to tell me, they canceled their service with him. Nope, they still have the service, but they called him up and begged for him to reduce services for their lawns and cut the prices the best he could until they got another job.
You'd think, if you lost your job, the first thing you should be able to handle if you are able-bodied is mowing your own lawn at least temporarily. After all, you have the time now to do the lawn. Nope, these guys won't do that, because they don't want to be seen by their neighbors mowing their own lawn because it would send a real signal that they are in some kind of financial trouble.
Yes, and what was worse is that he was indirectly teaching that materialism is very important to his son.
The message might be that you can be poor and happy. But you can be rich and happy too, but he was never going to get rich the way he was spending.
There is a very interesting book, called The Millionaire Next Door. Based on a survey they were able to find out that most people were rich, didn't live that way by flaunting wealth.
It's all about what makes you feel better to sleep at night really. Do you sleep better knowing that your savings account is large, and that you can easily pay all your bills and if there was an emergency like the house needs a need roof, AC, heating system, etc. that you don't freak out, or living with the illusion that you are impressing others.
3 times? That sounds pretty high for some markets like the midwest and down south. The rule should be, to buy what you can truly afford and need. The problem is people listen to what the mortgage company says they can afford which is insane to do. The mortgage company makes money on the interest, the biggest the loan balance the more interest charged and the more money they make. They don't care if you build savings, will be able to retire or send your kids to college.
shareAh...but remember when he's next to his wife in his dad's house? He says he couldn't wait to leave that house, that neighborhood, move up.
You know, that...American Dream?
What happened to us?
We can still fix it. We are worth it.
If you get a decent paying job, your first priority in terms of personal finances is to save enough to live on for a couple of years, so you have enough time to get another job, with some cushion, so you don't get frazzled and stressed out. Anything can happen at any time. Yes, that means living below your means so you can save money.
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