6 ms·

I really feel like this is it. Debt was introduced to parents of millennials. But it took some time to become institutionalized. Now millennials are in debt rig

I really feel like this is it. Debt was introduced to parents of millennials. But it took some time to become institutionalized. Now millennials are in debt right as they get out of college. No matter what college you leave, you can have debt if your parents didn’t pay for your tuition. On top of that, wages have been stagnant. Then there is the credit card debt that is very easy to accumulate is you aren’t careful with the money that you do have. This younger generation is too busy paying off their debt. Then they are expected to save 5 years worth of salary to pay for house down payment so they can get a mortgage for 30 years. It’s possible to make it happen but it requires a lot more effort than it did for our parents or grandparents.

allthecybers 8y ago
Even as a DINK millennial couple with a combined low six figure income a home purchase feels like a poor investment. Not only the down-payment of $100k+ but the property tax increases and then having to pay that mortgage for 30 years. Since we expect mobility and a certain level of future uncertainty it just doesn’t make sense for us and many more of our generation to tie ourselves to such and expensive geographic anchor.
- gowld 8y ago
  You can rent out that investment if you move. Paying rent is also expensive where home prices are expensive.
  - Latteland 8y ago
    If you are lucky you can get money from renting. If you were unlucky and had a house in the rust belt and jobs disappeared then few people could buy or rent your house. So people can get trapped. At least you can expunge your mortgage debt with bankruptcy. Not being able to expunge education debt is what's holding our economy down.
    - sokoloff 8y ago
      Not being able to expunge education debt is what makes education lending possible. Otherwise, there’d be a line to file strategic bankruptcy after the last tuition payment was due...
      - thedailymail 8y ago
        Why would anyone file for bankruptcy right before paying their last tuition payment?
        lowpro 8y ago
        I think the OP meant “make their last tuition payment to the university”, in other words, they’ve fully taken on the debt of education and are about to graduate.
        sokoloff 8y ago
        Indeed. I'm not quite sure how that was misread.
      - aedron 8y ago
        Cheap borrowing drives up prices of goods. This is true in housing and it is true in education.
      - EADGBE 8y ago
        Revocation of a degree with the dissolving of student loan debt in bankruptcy certainly could work for some.
        sokoloff 8y ago
        That doesn't make the lender whole, though; there's nothing they can repossess or foreclose on. It's a mild deterrent for some cases, but for a lot of situations, having the degree isn't anywhere near as valuable as having the education.
  - nostrademons 8y ago
    A lot of working professionals don't want the hassle of also being landlords, particularly remote landlords. If your tenant has a habitability issue, it's your problem. If they don't pay rent and you have to evict them, it's your problem. If they trash the place, it's your problem. If you pay a property manager 10% to make it their problem, the economics of paying a mortgage on a home you're no longer living in and renting it out become significantly more questionable - particularly in some place like the Bay Area, where mortgage payments are already often more than you would pay to rent the equivalent dwelling.
- EADGBE 8y ago
  The "NK" part of your "DINK" is probably influencing your decision on whether it's a worthy decision to buy a home. As a "DI3K", a house makes a ton of sense. We need space, we need a place for five people to live, and we need a house in an area where the schools are going to be great for the next 18 years. We don't need mobility as far as relocation goes, because it just doesn't make sense in our life choices right now. I mean, it's certainly possible, but I've seen second-hand what moving from town to town every 6 months does to a 7-year-old. I'm not mad that our property (as far from the coasts as possible) has increased in value ~$50-80K, either. Don't forget shorter mortgage commitments are available (And a much better deal when you can swing them).
  - m0rose 8y ago
    "(as far from the coasts as possible)" piques my interest. Why do you want to be as far from the coasts as possible?
    - EADGBE 8y ago
      I only meant for that as an example of a regular place for housing also seeing increased housing prices.
gowld 8y ago
A home should be about 3x salary at most, so down paymeny is 0.6 years' salary. Did you mean 5 years worth of savings?
- tomrod 8y ago
  Dallas median wage is $63.8k in 2016, median home prices closer to $230 to $250 depending on which town (some significantly higher). That is about 4x income, following your heuristic we should expect the median to fall a bit?
  - EADGBE 8y ago
    I don't like this X-Salary rule. It assumes no other large notes, which is more of what mortgage underwriters are caring about (debt-to-income ratios). Not having two student loan payments and a couple unnecessarily-high car payments (a couple well-to-do millennials surely make possible) could certainly push your mortgage affordability much higher than someone straddle with that debt (but completely able to pay and maintain it).
    - tomrod 8y ago
      8 think that's why the X-salary rule is usually considered an upper bound?
- iscrewyou 8y ago
  Yes, I meant 5 years worth of savings. Thanks for correcting me.

allthecybers 8y ago

Even as a DINK millennial couple with a combined low six figure income a home purchase feels like a poor investment. Not only the down-payment of $100k+ but the property tax increases and then having to pay that mortgage for 30 years. Since we expect mobility and a certain level of future uncertainty it just doesn’t make sense for us and many more of our generation to tie ourselves to such and expensive geographic anchor.

gowld 8y ago
You can rent out that investment if you move. Paying rent is also expensive where home prices are expensive.
- Latteland 8y ago
  If you are lucky you can get money from renting. If you were unlucky and had a house in the rust belt and jobs disappeared then few people could buy or rent your house. So people can get trapped. At least you can expunge your mortgage debt with bankruptcy. Not being able to expunge education debt is what's holding our economy down.
  - sokoloff 8y ago
    Not being able to expunge education debt is what makes education lending possible. Otherwise, there’d be a line to file strategic bankruptcy after the last tuition payment was due...
    - thedailymail 8y ago
      Why would anyone file for bankruptcy right before paying their last tuition payment?
      - lowpro 8y ago
        I think the OP meant “make their last tuition payment to the university”, in other words, they’ve fully taken on the debt of education and are about to graduate.
        sokoloff 8y ago
        Indeed. I'm not quite sure how that was misread.
    - aedron 8y ago
      Cheap borrowing drives up prices of goods. This is true in housing and it is true in education.
    - EADGBE 8y ago
      Revocation of a degree with the dissolving of student loan debt in bankruptcy certainly could work for some.
      - sokoloff 8y ago
        That doesn't make the lender whole, though; there's nothing they can repossess or foreclose on. It's a mild deterrent for some cases, but for a lot of situations, having the degree isn't anywhere near as valuable as having the education.
- nostrademons 8y ago
  A lot of working professionals don't want the hassle of also being landlords, particularly remote landlords. If your tenant has a habitability issue, it's your problem. If they don't pay rent and you have to evict them, it's your problem. If they trash the place, it's your problem. If you pay a property manager 10% to make it their problem, the economics of paying a mortgage on a home you're no longer living in and renting it out become significantly more questionable - particularly in some place like the Bay Area, where mortgage payments are already often more than you would pay to rent the equivalent dwelling.
EADGBE 8y ago
The "NK" part of your "DINK" is probably influencing your decision on whether it's a worthy decision to buy a home. As a "DI3K", a house makes a ton of sense. We need space, we need a place for five people to live, and we need a house in an area where the schools are going to be great for the next 18 years. We don't need mobility as far as relocation goes, because it just doesn't make sense in our life choices right now. I mean, it's certainly possible, but I've seen second-hand what moving from town to town every 6 months does to a 7-year-old. I'm not mad that our property (as far from the coasts as possible) has increased in value ~$50-80K, either. Don't forget shorter mortgage commitments are available (And a much better deal when you can swing them).
- m0rose 8y ago
  "(as far from the coasts as possible)" piques my interest. Why do you want to be as far from the coasts as possible?
  - EADGBE 8y ago
    I only meant for that as an example of a regular place for housing also seeing increased housing prices.

gowld 8y ago

A home should be about 3x salary at most, so down paymeny is 0.6 years' salary. Did you mean 5 years worth of savings?

tomrod 8y ago
Dallas median wage is $63.8k in 2016, median home prices closer to $230 to $250 depending on which town (some significantly higher). That is about 4x income, following your heuristic we should expect the median to fall a bit?
- EADGBE 8y ago
  I don't like this X-Salary rule. It assumes no other large notes, which is more of what mortgage underwriters are caring about (debt-to-income ratios). Not having two student loan payments and a couple unnecessarily-high car payments (a couple well-to-do millennials surely make possible) could certainly push your mortgage affordability much higher than someone straddle with that debt (but completely able to pay and maintain it).
  - tomrod 8y ago
    8 think that's why the X-salary rule is usually considered an upper bound?
iscrewyou 8y ago
Yes, I meant 5 years worth of savings. Thanks for correcting me.