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Huge difference between living paycheck to paycheck because you struggle to afford basic necessities and living paycheck to paycheck because you took out too la

Huge difference between living paycheck to paycheck because you struggle to afford basic necessities and living paycheck to paycheck because you took out too large of a mortgage. In one case you have an asset to sell if needed.

wonderwonder 8y ago
Agree in theory, but quite often that asset is not sellable as its underwater. End result is a foreclosure and/or bankruptcy. If the underlying behavior is not changed then people can spiral into further debt that they cant get out of as they already spent their once every seven year BK ticket. If people don't know how to budget you get trapped. But yes I do fully agree, I would much rather be broke with a large income than a low one.
kurthr 8y ago
Often that debt is spread out on 5 different credit cards and there is no asset to sell other than shoes (a favorite of both genders) or lifestyle "influence".
astura 8y ago
The majority of people who are living paycheck to paycheck don't have enough assets to cover debts. Furthermore, paycheck to paycheck living outside of poverty and disability is rarely the result of a one time mistake, it's usually due to an inability to budget and save day-to-day. Which is the reason they end up with more debts than assets. Not to mention people who can't afford their house can often not afford to take care of their house, which reduces its value.
- milesvp 8y ago
  Upkeep’s a killer. I kept having people tell me to buy in my 20’s, and I couldn’t fathom their logic. I could rent a 4 bedroom house for less than a mortgaged, let alone alone a mortgage plus upkeep. I kept doig the math, and I’d have to tie up a huge chunk of capital, and hope the house appreciated faster than upkeep costs, and that I didn’t piss away all gains again in realtor fees when I next needed to move. But really it’s the upkeep everyone kept ignoring in these conversations. $300/mo in my region is pretty standard, and no one would acknowledge how big this cost really was. Rents finally started to skyrocket where I live, so buying finally made sense for us to try to lock in our housing exoense. But even then, the upkeep occassionally makes me wonder if I did the math right. Like can I put off buying a new roof another year? Or will that eat up my maintanence budget for the next couple years?
  - dawnerd 8y ago
    I know it’s a terrible answer but buy a newly constructed house. That’s all I’ve bought and the maintenance on them is close to nothing. Plus the house will be a lot more energy efficient and save even more money. Just stay away from an hoa or condo.
    - astura 8y ago
      The premium on new construction is around 20% vs existing structures, so you arent saving any money, just paying up front (and financing it to boot). Plus many people want to live in an already established neighborhood.
      - dawnerd 8y ago
        I’m not so sure about that. My brand new house in the Portland metro was cheaper than comparable older houses. I do get screwed a bit on taxes but they’re still lower than they were at my house in California for the same price. Overall I’m saving money. Going on three years and the only expense I’ve had in upkeep is air filters. Also both new homes I’ve bought were in existing neighborhoods. Not all new homes are in new developments. I’m fact, I would avoid those like the plague. HOA hell + possible mello roos if in California.
        astura 8y ago
        You can be as "not sure" as you want, data doesn't lie https://www.trulia.com/research/new-home-smell/ https://www.trulia.com/research/new-home-smell/ Portland happens to be among the metros with the smallest new house premium at 14%. Thats still $28,000 premium on a 200,0000 house. Sure "not all new homes" are in new developments, but the vast majority of them are. Most neighborhoods simply don't have empty lots to build on, they don't exist, any new homes are teardowns.
        dawnerd 8y ago
        I’m guessing trulia is looking as asking price because that’s definitely off based on actual experience shopping around. Because of property tax being much lower, older homes can ask a lot more. Sure new developments here are asking 600k+ for a tiny condo but they’ve all been reducing prices. In my part of town my house was more than 50k lower than an almost identical copy of my house down the street that’s been here for 10 years. Besides, I never said all new homes were cheaper so I’m not sure why you’re even trying to argue it. Shop around and you’ll find a deal.
vram22 8y ago
>and living paycheck to paycheck because you took out too large of a mortgage. In one case you have an asset to sell if needed. Did a lot of people wrongly (as it turned out) think that in the 2008 Great Recession?
- thelasthuman 8y ago
  A lot of people were manipulated and lied to by professionals with a profit motive.
HarryHirsch 8y ago
The trouble is, in America the bigger mortgage often comes with a better school district.
- dragonwriter 8y ago
  > The trouble is, in America the bigger mortgage often comes with a better school district. That's because our metric for school and school district quality largely is a measure of effects of socioeconomic status of the students, not anything the schools actually produce. So, yes, the schools in areas that have a higher buy-in cost have better marks, because they have on-average students better set-up for success. That doesn't mean the students in that district, if individually moved to a different district, would do worse, it just means that the students who would do worse independent of district are lesd likely to have parents that can afford to live in the “better” district.
  - danieltillett 8y ago
    It is actually more due to the students who are not there. Yes it is true that the actual teaching is little better between districts, but the number of disruptive students that prevent any learning is vastly less in the expensive districts. If you have the ability to kick out any student who is disruptive you can turn any school in any area into a high quality school.
    - wonderwonder 8y ago
      This is then compounded by giving more money to the successful schools and less to the failing schools. This seems paradoxical as most students are zoned for a school and don't get to elect to transfer to a better one. So they are stuck in a bad school that is going to get worse due to reduced funding for failing. So kids who's parents can afford to send them to a good school district are rewarded driving home that generally where you start socio-economically is where you end up.
    - dragonwriter 8y ago
      > the number of disruptive students that prevent any learning is vastly less. The evidence doesn't really support that, though; students in a “bad” district don't have worse performance than students with similar background in a “better” district (whether because of distraction or any other reason), “better” districts just have more students with backgrounds which are correlated with educational success, of which the strongest factor is parental education.
thelasthuman 8y ago
The average person is not a mortgage/real estate expert. They trusted professionals who misled them because of the profit motive. (For an example look into the reasons for the 2008 housing crash)
- refurb 8y ago
  The average person might not be an expert, but they should know what their monthly payment is versus their take home pay. Even knowing this plenty of people put themselves in precarious financial situations when buying a home.

wonderwonder 8y ago

Agree in theory, but quite often that asset is not sellable as its underwater. End result is a foreclosure and/or bankruptcy. If the underlying behavior is not changed then people can spiral into further debt that they cant get out of as they already spent their once every seven year BK ticket. If people don't know how to budget you get trapped. But yes I do fully agree, I would much rather be broke with a large income than a low one.

kurthr 8y ago

Often that debt is spread out on 5 different credit cards and there is no asset to sell other than shoes (a favorite of both genders) or lifestyle "influence".

astura 8y ago

The majority of people who are living paycheck to paycheck don't have enough assets to cover debts. Furthermore, paycheck to paycheck living outside of poverty and disability is rarely the result of a one time mistake, it's usually due to an inability to budget and save day-to-day. Which is the reason they end up with more debts than assets. Not to mention people who can't afford their house can often not afford to take care of their house, which reduces its value.

milesvp 8y ago
Upkeep’s a killer. I kept having people tell me to buy in my 20’s, and I couldn’t fathom their logic. I could rent a 4 bedroom house for less than a mortgaged, let alone alone a mortgage plus upkeep. I kept doig the math, and I’d have to tie up a huge chunk of capital, and hope the house appreciated faster than upkeep costs, and that I didn’t piss away all gains again in realtor fees when I next needed to move. But really it’s the upkeep everyone kept ignoring in these conversations. $300/mo in my region is pretty standard, and no one would acknowledge how big this cost really was. Rents finally started to skyrocket where I live, so buying finally made sense for us to try to lock in our housing exoense. But even then, the upkeep occassionally makes me wonder if I did the math right. Like can I put off buying a new roof another year? Or will that eat up my maintanence budget for the next couple years?
- dawnerd 8y ago
  I know it’s a terrible answer but buy a newly constructed house. That’s all I’ve bought and the maintenance on them is close to nothing. Plus the house will be a lot more energy efficient and save even more money. Just stay away from an hoa or condo.
  - astura 8y ago
    The premium on new construction is around 20% vs existing structures, so you arent saving any money, just paying up front (and financing it to boot). Plus many people want to live in an already established neighborhood.
    - dawnerd 8y ago
      I’m not so sure about that. My brand new house in the Portland metro was cheaper than comparable older houses. I do get screwed a bit on taxes but they’re still lower than they were at my house in California for the same price. Overall I’m saving money. Going on three years and the only expense I’ve had in upkeep is air filters. Also both new homes I’ve bought were in existing neighborhoods. Not all new homes are in new developments. I’m fact, I would avoid those like the plague. HOA hell + possible mello roos if in California.
      - astura 8y ago
        You can be as "not sure" as you want, data doesn't lie https://www.trulia.com/research/new-home-smell/ https://www.trulia.com/research/new-home-smell/ Portland happens to be among the metros with the smallest new house premium at 14%. Thats still $28,000 premium on a 200,0000 house. Sure "not all new homes" are in new developments, but the vast majority of them are. Most neighborhoods simply don't have empty lots to build on, they don't exist, any new homes are teardowns.
        dawnerd 8y ago
        I’m guessing trulia is looking as asking price because that’s definitely off based on actual experience shopping around. Because of property tax being much lower, older homes can ask a lot more. Sure new developments here are asking 600k+ for a tiny condo but they’ve all been reducing prices. In my part of town my house was more than 50k lower than an almost identical copy of my house down the street that’s been here for 10 years. Besides, I never said all new homes were cheaper so I’m not sure why you’re even trying to argue it. Shop around and you’ll find a deal.

vram22 8y ago

>and living paycheck to paycheck because you took out too large of a mortgage. In one case you have an asset to sell if needed. Did a lot of people wrongly (as it turned out) think that in the 2008 Great Recession?

thelasthuman 8y ago
A lot of people were manipulated and lied to by professionals with a profit motive.

HarryHirsch 8y ago

The trouble is, in America the bigger mortgage often comes with a better school district.

dragonwriter 8y ago
> The trouble is, in America the bigger mortgage often comes with a better school district. That's because our metric for school and school district quality largely is a measure of effects of socioeconomic status of the students, not anything the schools actually produce. So, yes, the schools in areas that have a higher buy-in cost have better marks, because they have on-average students better set-up for success. That doesn't mean the students in that district, if individually moved to a different district, would do worse, it just means that the students who would do worse independent of district are lesd likely to have parents that can afford to live in the “better” district.
- danieltillett 8y ago
  It is actually more due to the students who are not there. Yes it is true that the actual teaching is little better between districts, but the number of disruptive students that prevent any learning is vastly less in the expensive districts. If you have the ability to kick out any student who is disruptive you can turn any school in any area into a high quality school.
  - wonderwonder 8y ago
    This is then compounded by giving more money to the successful schools and less to the failing schools. This seems paradoxical as most students are zoned for a school and don't get to elect to transfer to a better one. So they are stuck in a bad school that is going to get worse due to reduced funding for failing. So kids who's parents can afford to send them to a good school district are rewarded driving home that generally where you start socio-economically is where you end up.
  - dragonwriter 8y ago
    > the number of disruptive students that prevent any learning is vastly less. The evidence doesn't really support that, though; students in a “bad” district don't have worse performance than students with similar background in a “better” district (whether because of distraction or any other reason), “better” districts just have more students with backgrounds which are correlated with educational success, of which the strongest factor is parental education.

thelasthuman 8y ago

The average person is not a mortgage/real estate expert. They trusted professionals who misled them because of the profit motive. (For an example look into the reasons for the 2008 housing crash)

refurb 8y ago
The average person might not be an expert, but they should know what their monthly payment is versus their take home pay. Even knowing this plenty of people put themselves in precarious financial situations when buying a home.