9 ms·

A somewhat sensible take, but the issue isn’t just healthcare. A lot of your life is based off of long-term, fixed cost cash flow. E.g. you can’t pay less on yo

• wbl 2y ago
  Avoid lifestyle creep! I have to say I'm bad at this myself: somehow it all adds up, while each individual expense doesn't look so bad.
  • dixie_land 2y ago
    Exactly, I feel a lot of my coworkers fell under this trap: if you need cashflow for mortgage on your 4m mansion in (affluent neighborhood), you can't really afford it.
    • Brystephor 2y ago
      The only mortgages that don't require cashflow are the paid off mortgages. Even if someone has a year of savings, or two years, or three, after that amount is drained, they need cash flow again. So how does one buy a house without being dependent on cash flow?
      • mulmen 2y ago
        Well the most obvious approach would be to pay cash. The more fiscally conservative option is to only borrow money if you have capital which is earning income at a higher rate than the mortgage. This probably necessitates having more capital than the house costs.
        • xeromal 2y ago
          The problem with that is that unless you have an extremely well paying job or rich parents, you have to outsave inflation and rising house prices. You may never own. Getting a loan just locks you into an inflation proof price as a "forced" savings. I don't think it's realistic at all for 85% of Americans to save for a new house.
          • mulmen 2y ago
            Yes, it’s a tragedy of the commons. That doesn’t make taking on a loan you can’t afford less of a bad idea. House prices are unaffordable because people take on loans they can’t afford. This reinforces the unaffordable prices. If milk was $40.00 a gallon you’d just stop putting it on cereal and eventually farmers get the message. Houses are the same thing. If you can’t comfortably afford a house then don’t buy it. You’re stuck renting or buying something more modest. This isn’t complicated. The idea that house prices can only go up is delusional. Nothing about a house is uniquely inflation proof or even inflation resistant. This isn’t the only investment vehicle available to you. This idea that houses are an important part of financial security is putting the cart in front of the horse. It leads to the NIMBYism that prevents additional supply from being built because prices must always go up. We all exist in the same economy and no action happens in a vacuum. When you buy something you have reduced supply and applied upward pressure on price. Individually this effect is so small it is immeasurable. In aggregate it isn’t.
            • Cthulhu_ 2y ago
              This was a failure of regulation, not just in the US but elsewhere too; banks and mortgage brokers weren't doing their due diligence and were giving out loans and mortgages that people couldn't afford based on their income and other outstanding debts, eventually leading to the 2007/8 financial crisis. Which should have been a lesson, but five years later, housing prices recovered and ballooned. I don't know why besides increased demand and reduced availability, clearly people can still get mortgages despite the lessons learned from the crisis.
              • 2y ago
      • ghaff 2y ago
        Well, you need cashflow on a house in general. Even with a paid-off mortgage, I'm easily $10K/year and probably closer to $20K if I'm not pushing various stuff off.
        • sokoloff 2y ago
          Property tax alone is around $13K/yr for me. Insurance is another couple grand. Only after that comes wear and tear and maintenance items.
          • herf 2y ago
            If you pay cash for a house and put 60% more in an annuity, you cover the total costs. Not cheap though.
            • ghaff 2y ago
              The point is that, however you finance it, owning a paid-for place will often have significant ongoing costs. Some more, some less.
            • phonon 2y ago
              Why would you forgo the mortgage interest tax deduction?
              • ghaff 2y ago
                For modestly-priced houses at least may not hit deductions these days.
              • sgerenser 2y ago
                2025 standard deduction is $30k for MFJ. Ain’t many people passing that mark these days in itemized deductions so the mortgage interest deduction is moot.
      • jonkho 2y ago
        If the problem is the mortgage then rent /s. If the problem is you need money to pay the bills, well I got news for you…
    • xeromal 2y ago
      I make a decent salary as a programmer (150k) but my house only cost 250k and my mortgage is about 1400. How I see it, if I have to flip burgers to keep my house, I can pull it off. I can't imagine have a mortgage that's 10gs a month.
      • mvdtnz 2y ago
        For a lot of people this isn't possible. You won't find a liveable home in my country for under 600k.
        • xeromal 2y ago
          For sure but that would mean saving for it is even more impossible.
        • jokethrowaway 2y ago
          And salaries are likely not 150k either
        • andruby 2y ago
          I'm curious what country that is. Monaco? How are housing prices in the neighbouring countries?
          • mvdtnz 2y ago
            New Zealand.
            • andruby 2y ago
              That doesn’t leave you with a lot of neighboring countries. When you said 600K, did you mean NZ dollars or US dollars? If the former that would be about 360K USD. On a median NZ income of NZ60K per year, that’s indeed rough. Top 3 worst affordable according to claude.ai, behind Hong Kong and South Korea. The most affordable housing countries are USA, Germany and Ireland
        • red-iron-pine 2y ago
    • silisili 2y ago
      Every house requires cash flow, regardless of mortgage amount. There's something to be said for overspending on a house for sure - but let's not forget mortgage(if any), maintenance, property tax, utilities, insurance, etc. Last year I spent more on maintenance than my mortgage cost.
    • johnnyanmac 2y ago
      You get a mortgage because most people cannot just outright buy a hosue with cash. We can discuss the balance of how big a mortgae to your salary, but most people through American history could "not really afford it" by that definition. But most of history relied on a labor market focusing on retention and training. We're far past that. We're a gig econnomy in all but name with these kinds of evonomic swings.
  • GiorgioG 2y ago
    Can I avoid inflationcreep? How?
    • krambs 2y ago
      Index funds?
      • GiorgioG 2y ago
        I can't eat index funds.
        • JumpCrisscross 2y ago
          > I can't eat index funds You can't eat cash either. If "can I eat it" is your asset metric, buy long-lasting preserved foods.
        • basiccalendar74 2y ago
          you can sell index funds and buy stuff. you will mostly be ahead of inflation.
        • JumpCrisscross 2y ago
          > I can't eat index funds You can't eat cash either. If "can I eat it" is your metric, buy army rations.
          • Cthulhu_ 2y ago
            Army rations are much more expensive than human food though.
          • johnnyanmac 2y ago
            I don't know why we treat large stock portfolios as if it's a convinient savings account in these talks. My financial teachings were always emergency fund -> 3-6 months of savings immediately accessible -> consider stocks (hire a financial planner if you don't know stocks) -> consider asset management. your first foray into saving if you're barely spacing by isn't to rely on the S&P 500.
  • nickff 2y ago
    There are also different types of creep, some that you can easily stop, and others that are more difficult. Specifically, everything that involves a medium to long-term obligation (such as a mortgage or vehicle loan) can cause problems if you cannot sustain it through cashflow interruptions or significant declines. Going out to expensive restaurants and Broadway shows definitely costs a lot of money, but you can immediately stop them if you have money trouble.
    • chii 2y ago
      the problem with restaurants and broadway is that you've already spent the money on those things when the going is good, and can't claw it back retroactively when the going is bad. That's why a budget is necessary, and you plan for emergency (of which a layoff is one). Saving up for an emergency fund means you don't spend on luxury until it is saved, which means no broadway or restaurants (unless you're super highly paid, in which case it'd be quite fast).
    • ramblerman 2y ago
      You can still sell your house or car. The first potentially for more money. The restaurants and broadway shows are gone. I’m all for spending on experiences btw. But you have it backwards financially.
      • johnnyanmac 2y ago
        Car market is crazy these past few years, but the common wisdom is "your car loses worth the moment it leaves the lot". and it is probably still an essential so you can ensure cash flow. It's more expensive making a bad bet with a beater and spending hundreds keeping it running. And selling your house is a last resort. rent is still more than mortgageso you're losing both asset and liquid wealth with that move just to buy some time. You're better off taking out a second mortgage if needed than selling off entirely.
        • gruez 2y ago
          >And selling your house is a last resort. rent is still more than mortgageso you're losing both asset and liquid wealth with that move just to buy some time. You're better off taking out a second mortgage if needed than selling off entirely. ...not to mention that if you're losing your job and can't find a new one readily, chances are you're in an economic calamity and you'll be selling near the bottom.
  • dvngnt_ 2y ago
    like kids?
  • majani 2y ago
    One thing I've come to realize is that the larger your social circle, the more prone you are to comparisons and hence lifestyle creep. You can see this where the careers that involve a lot of socializing (sales, entertainment, law, finance etc) are known for having flashy people. And the careers that you can do as a loner (programming, quant, researcher etc) are known for having miserly folk
  • neves 2y ago
    This is somewhat a crazy advice. Shouldn't you have a spouse or children or a house that could have their live disrupted if you need to move jobs?
    • red-iron-pine 2y ago
      and thus why no one is having kids
    • HDThoreaun 2y ago
      I bought a house than costs 3.5x my salary. I lose my job I can still pay mortgage from savings.
• jes5199 2y ago
  honestly this is one of the reasons I prefer pre-IPO companies, my salary is lower until they do a buyback or an exit, but it ends up basically in the same place over the long term. This is how I was able to put a downpayment on a house without consciously "saving up" for it. Obviously there's some risk but I've had two buybacks, one IPO, and two acquisitions since 2012
• lazide 2y ago
  Just wait until you have to deal with child support and imputed income. Getting fired/laid off is about the only thing that can save you.
  • johnnyanmac 2y ago
    Can't relate, dating market is somehow worse than the job market.
    • lazide 2y ago
      Oh believe me, after the experience I’m talking about, the last thing you’ll want to do is date. At least, anyone who can find out where you live. Maybe disappear into the woods, or change countries. Or self delete.
• midhhhthrow 2y ago
  This why we need the tiny home movement combined with progressive property taxes - 0 prop tax bracket for lowest 20% property values If you have mortgage then you don’t really own your house.
  • s1artibartfast 2y ago
    Seems like this would hurt those laid off here. They are probably in the top 20% of property values. That said, I think it is a pretty bad idea. Use of public funds dont increase with property value, it just means you have deeper pockets. I would be more in favor of flat taxes on homes independent of value, so people pay their fair share for community resources consumed.
  • Carrok 2y ago
    Tiny homes are great! Provided you have no family, and no hobbies.
  • Cthulhu_ 2y ago
    Tiny homes like the coffin homes of overpopulated cities, you mean? Or tiny homes like the luxury single occupant container buildings on a bit of land? Tiny homes are not the solution, they are hipster semi-cottage-core fashion homes. You're probably thinking of regular apartments, but for some reason they aren't built at the rate needed. Build ten million apartments (for starters) and the cost of living will go down. Satisfy / saturate the market first, then think of gentrifying with fashion homes.
    • johnnyanmac 2y ago
      >but for some reason they aren't built at the rate needed. crabs in a bucket. Those who got in and got theirs don't want their property value falling. Americans treating housing as a stock instead of a necessary resource for living really ruined a lot of the dynamic of city planning.
• enugu 2y ago
  There seems to be an analogy to servers being capable enough for usual demand(income>spending), but fails due to some downtime for some servers(out of a job) or peak loads(medical emergency). This can be amortized by having data centers serving multiple apps(social security, insurance - but they dont always exist). One main fault in the analogy is that in an economic crisis, there is a vicious cycle of income loss which leads to lower demand leading to more lost jobs. This coordination failure can be handled by fiscal/monetary policy. Whereas server failure, even when widespread due to a virus doesn't happen recursively like that.