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Price shocks in formative years scar consumption for life

knowledge.wharton.upenn.edu

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Re: Price shocks in formative years scar consumption for life

#181

Post by mettamage »

scottLobster wrote: post #117
twoquestions wrote: post #104

Earlier quoted context omitted.

True facts, this. My spouse never had to wonder where the electric or gas money was coming from, even though their family is really frugal despite making really good money, and I'm still surprised at their decisions that I irrationally describe as extravagant even though they're better decisions all told. Even though I have a great job now and have for years, I still find myself shying away from good things that I re…

Coming from the more well-off side, it makes friendships with people on the other side harder as well. By chance a good chunk of my social circle in college was less well off than me, and while we liked playing games together I got weird looks for buying shirts new at Macy's or Michelin tires. It just seemed to rub them the wrong way, like they thought I was trying to show off or rub something in their face even thou…

Can confirm this. Middle class here. Have a relationship with someone well-off. I view it as cultural differences that we need to overcome. In our case we did. The only "downside" is that it takes a very consistent form of energy. I'm constantly thinking "if I'd be as rich as she is, how would I deal with the situation?" I can imagine it to some extent due to how I play poker and seeing parallels with my stack size versus my financial situation. Long story short: when I feel I don't have enough, I get very tight on my spending. When I feel I have enough, I get loose and lax. As one might imagine, I wasn't a very good poker player because of that ;-)

Re: Price shocks in formative years scar consumption for life

#183

Post by deathanatos »

nradov wrote: post #113
deathanatos wrote: post #103

Earlier quoted context omitted.

I'm not in SF. The last listing I looked at was 800 sq ft, run down, literally "as-is" property: $500k valuation from Zillow (it's listed for less … but not by much). That's about $2500/mo, in mortgage alone. Decent properties, in suburban areas, at ~$1M. Ir rural areas, yeah, they're cheaper … and salary would get "adjusted" the moment I try that.

Here's a decent 3-bedroom single family house in suburban Cleveland for $395K. https://apps.realtor.com/mUAZ/313q9jxa That's just one example but you can find thousands of similar listings all over the country. Outside of high-cost coastal areas, housing is still fairly affordable in most of the country.

And, as stated, I would take a "CoL adjustment" by moving there.

That particular property falls pretty squarely in the "exception proves the rule" territory for me; it's a 135 y/o dwelling, so I expect you'll be paying more than the immediate price tag. Like too many listings, it doesn't come w/ a floorplan, and with what photos it gives I'm a bit suss on the 3bd/3ba (piecing together the photos, I think we've converted a second story apt.'s LR into a BR?). It's certainly seen a remodel (although … IDK about the taste of the remodel. But let's say taste is unimportant!) No driveway. The backyard is … well it needs work. You're still batting $2k/mo in Cleveland.

I'd almost hazard a guess that my CoL adjust would be >$500/mo, but I don't get to know these things, being an employee.

There are a few intangibles in my situation that make "move to Cleveland" a "it's not going to happen".

There's a point where one needs to step back and ask oneself, if that's what's affordable on SWE's salary, what's affordable on a baker's salary?

Re: Price shocks in formative years scar consumption for life

#184

Post by [deleted] »

lotsofpulp wrote: post #169
kayodelycaon wrote: post #167

Earlier quoted context omitted.

Dealing with cash is complicated actually. You need to protect it from theft. You need to count it daily. You need a bank to deposit it. You need to have change because people don't bring exact amounts. Having change requires a bank or some other facility to exchange currency with. Cards require a machine, some kind of network connectivity, and an account. It's actually a lot easier to deal with as a small business.…

Yes, but I was talking about a scenario where there is no network connectivity and hence no ability to take card payments. In the case of getting paid something versus getting paid nothing, I am guessing most merchants will opt to put in the work to accept cash rather than shut down.

[deleted]

Re: Price shocks in formative years scar consumption for life

#185

Post by deathanatos »

selimthegrim wrote: post #160
nradov wrote: post #113

Earlier quoted context omitted.

Here's a decent 3-bedroom single family house in suburban Cleveland for $395K. https://apps.realtor.com/mUAZ/313q9jxa That's just one example but you can find thousands of similar listings all over the country. Outside of high-cost coastal areas, housing is still fairly affordable in most of the country.

That’s not the suburbs.

I think that's their "point", in that it's an urban home that's "affordable". I.e., if I only chose a city that wasn't part of one of the megalopolises, I wouldn't have problems.

Re: Price shocks in formative years scar consumption for life

#186

Post by usrn »

doubled112 wrote: post #140
twox2 wrote: post #99

Earlier quoted context omitted.

100% also, why do you need to buy a house in the first place?

Because my mother taught me that 100% of my value as a person is being a home owner because that's the only thing that matters. Not even a condo will do. /s but only sort of

Mine literally told me every day you shouldn't have kids unless you own a house.

Re: Price shocks in formative years scar consumption for life

#187

Post by jacobr1 »

selimthegrim wrote: post #156
dmux wrote: post #108

Earlier quoted context omitted.

>So I just hoard cash like an idiot as that makes me feels safe and lets me sleep well at night. If you haven't already, look into Certificates of Deposit ("CD") at your local bank. They're FDIC insured (so if the bank goes under, you're covered, up to something like $250k) and you don't have to worry about losing the principal amount you put in. If you ever need to withdraw that money in case of an emergency, you on…

Are interest rates high enough again to make laddering worth it?

For I-Bonds the rates are now worth it. They are very CD-like, in that you can't withdraw them for the first year, and in the first 5 there is a few month interest penalty for early withdrawal.

You can only buy $10k per person per year, but as a married couple, you could build up 100K in savings over 5 years, and even faster if you hold them in a trust.

Re: Price shocks in formative years scar consumption for life

#188

Post by flybrand »

teddyh wrote: post #50
doix wrote: post #17

Earlier quoted context omitted.

> It makes you penny wise and pound foolish while always having to look over your shoulder monetarily speaking. Could you explain what you mean? I grew up pretty poor, single income PhD student/post-doc salary family with two kids. Eventually my father got a proper position at a university, but until then we were pretty poor. My parents used to sleep on the floor, we had almost no furniture(I remember playing footbal…

I often link to these articles. Especially the second one is exactly what you are asking about: • 5 Things Nobody Tells You About Being Poor, May 27, 2011: https://www.cracked.com/blog/5-things-nobody-tells-you-about... • The 5 Stupidest Habits You Develop Growing Up Poor, January 19, 2012: https://www.cracked.com/blog/the-5-stupidest-habits-you-deve... • 4 Things Politicians Will Never Understand About Poor People,…

There were many brilliant Cracked articles in their day.

Re: Price shocks in formative years scar consumption for life

#189

Post by robotresearcher »

selimthegrim wrote: post #156
dmux wrote: post #108

Earlier quoted context omitted.

>So I just hoard cash like an idiot as that makes me feels safe and lets me sleep well at night. If you haven't already, look into Certificates of Deposit ("CD") at your local bank. They're FDIC insured (so if the bank goes under, you're covered, up to something like $250k) and you don't have to worry about losing the principal amount you put in. If you ever need to withdraw that money in case of an emergency, you on…

Are interest rates high enough again to make laddering worth it?

Was offered 1% for 11 month deposit yesterday. Much better than last year's 0.25%, but still, what, 1/8 of US inflation?!

Re: Price shocks in formative years scar consumption for life

#190

Post by w-j-w »

DrBazza wrote: post #172
ChuckNorris89 wrote: post #2

Being poor in general, during your childhood, scars you for life. It makes you penny wise and pound foolish, adverse to taking risks in your career and investments, can destroy your confidence in yourself, while always having to look over your shoulder monetarily speaking. Habits that even after you remove poverty from your live, you still feel the the anxiety and triggers in your head.

Another way of stating that article is that most people in their 20s and 30s have only ever known low-inflation and stability. Those in their mid-40s onwards are possibly young enough to remember how what their parents dealt with in the 70s.

Low inflation, yes, but not stability. Many people in their 20s now watched a parent lose their job during the 2008 housing crisis. Just because they didn't see the 70s don't mean they haven't seen macroeconomic calamity affect their parents microeconomic reality.
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