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The Terrifying Reality of Long-Term Unemployment

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Re: The Terrifying Reality of Long-Term Unemployment

#291

Post by drcube »

snowwrestler wrote: post #242
drcube wrote: post #196

Earlier quoted context omitted.

>It's because 2/3 of Americans are homeowners, so for a majority of Americans, falling house prices are bad. Why? Those homeowners shouldn't care what the price of their house is. While they're living in it, it doesn't matter, and when they sell, presumably their next house will be cheaper too. The only time home prices should matter is in comparison to the overall market. If your house got cheaper while other homes…

Let's say I take out an $80,000 mortgage to buy a $100,000 house--which then appreciates to $120,000. If I sell the house, I walk away with $40,000 in cash, which I can keep tax-free (a special privilege accorded the capital gains on your primary residence). Now let's say I want to buy a home the same size--it's $120,000 too. But I only need a down payment of 20% to secure the mortgage--that's $24,000. So now I'm bac…

Before, you had $80k in debt, now you have $96k in debt. You basically just took out a home equity loan.

Re: The Terrifying Reality of Long-Term Unemployment

#292

Post by dyno12345 »

yummyfajitas wrote: post #62
rayiner wrote: post #52

Earlier quoted context omitted.

The market doesn't punish the companies for irrational behavior when everyone engages in the same irrational behavior.

Why don't you engage in rational behavior and get rich?

You won't get rich. You will have a somewhat easier time hiring people.

The difference may be small enough that you wouldn't even notice subjectively.

Re: The Terrifying Reality of Long-Term Unemployment

#293

Post by gcb0 »

jngreenlee wrote: post #229
jdietrich wrote: post #157

Earlier quoted context omitted.

It's a very simple mathematical error - people compare the cost of a mortgage payment with the cost of a month's rent, failing to take into account that only a tiny fraction of the mortgage payment actually becomes equity. If they actually sit down and work it out, most people are astonished at how much flexibility they sacrifice for that small slice of equity.

Here's a fun calculator (not by me) that takes all these things into account. It's great fun! http://michaelbluejay.com/house/rentvsbuy.html The author offers a reward if you find an error.

love how those calculators start with 200~300k houses prices.

in most areas where i want to live, this is the going price for a buying an extra parking spot at the building garage. when you get a good price.

Re: The Terrifying Reality of Long-Term Unemployment

#294

Post by nilkn »

sfont wrote: post #285
nilkn wrote: post #278

Earlier quoted context omitted.

I'm in TX too (not Austin, but another big city). I'm curious how you're liking consulting here and how it's going. Do you find most of your clients in Austin or are they remote? And do you feel like you would be better off just getting a salaried full-time job with benefits given the going rates here for salaries vs. consulting? If you don't mind spilling the beans (I understand if not), how much are you generally a…

I can't give you any insight into developer wages. But as far as commuting in the Houston area goes, I used to commute from Fort Bend County to Bush Airport (which really was an absurd commute) and it took me about an hour each way. So if you're trying to keep your commute under 45 minutes each way, you may have a wider area of acceptable areas to live in. Especially if you are thinking of companies inside the loop.

I'll be making about $83k/year this coming June (haven't graduated yet...) working in the Greenway area in the loop. I have an apartment lined up which will actually be in walking distance, so life will be easy. But I'm the sort of person who tends to think too far forward in the future, and I don't want to be renting an apartment my whole life. To me, the sooner one owns a home (and by own I mean own, not a mortgage) the better, as that's one major step towards true financial independence, as it means no rent or mortgage payment at all. And short of striking it rich, the only way to outright own a home early on in life is to make a lot of money with a permanent residence in a very cheap area.

At the same time, I really don't want to commute and don't feel comfortable spending more than double my salary on a house (I don't want to be "house poor").

In striving to satisfy all these desires simultaneously, I'm led to the consideration of consulting in the next few years. A few posters (patio11 and a few others I don't remember) here on HN have convinced me that, if done right, consulting can be a path to financial independence without the unpredictability of the startup "lottery". The idea, I hope, is that through partially remote consulting work one can make a wage which is disproportionately high compared to the cheap area in which one lives. It remains to be seen if any of this speculation is actually true.

Re: The Terrifying Reality of Long-Term Unemployment

#295

Post by snowwrestler »

drcube wrote: post #291
snowwrestler wrote: post #242

Earlier quoted context omitted.

Let's say I take out an $80,000 mortgage to buy a $100,000 house--which then appreciates to $120,000. If I sell the house, I walk away with $40,000 in cash, which I can keep tax-free (a special privilege accorded the capital gains on your primary residence). Now let's say I want to buy a home the same size--it's $120,000 too. But I only need a down payment of 20% to secure the mortgage--that's $24,000. So now I'm bac…

Before, you had $80k in debt, now you have $96k in debt. You basically just took out a home equity loan.

Yup; I also could have just refinanced the first house at the higher appraisal. All three are good reasons for a homeowner to be happy their home value is going up.

Re: The Terrifying Reality of Long-Term Unemployment

#296

Post by svachalek »

gvb wrote: post #256
jdietrich wrote: post #157

Earlier quoted context omitted.

It's a very simple mathematical error - people compare the cost of a mortgage payment with the cost of a month's rent, failing to take into account that only a tiny fraction of the mortgage payment actually becomes equity. If they actually sit down and work it out, most people are astonished at how much flexibility they sacrifice for that small slice of equity.

That mathematical error corrects itself over time. I now own my house. Rent is forever.

Property tax is forever too.

Re: The Terrifying Reality of Long-Term Unemployment

#297

Post by aidenn0 »

rdtsc wrote: post #286
dredmorbius wrote: post #237

Earlier quoted context omitted.

What leverages up can (and will) leverage down. The problem with the housing collapse was that people with low or zero down-payment mortgages found that the property value fell, wiping out their entire stake (if they had any at all). More skin in the game should (though there's some research suggesting otherwise) make the market more stable by reducing the ability to speculate. This is a lesson that goes back to the…

Each of those is an contribution to risk and and potential reward, I guess it still comes down to whether people think their house will appreciate or not faster than inflation. There is also: * Closing costs. 5k to 10k can easily go to that only. So just buying and selling constantly could end wasted eaten "transaction costs" * Chance of moving. Are you likely to move? If so think twice about a house. This is offset…

I recently sold a condo where I paid closing costs for the buyer. Total costs that didn't go to me were in excess of $30k.

Re: The Terrifying Reality of Long-Term Unemployment

#298

Post by aidenn0 »

jdietrich wrote: post #157
enraged_camel wrote: post #127

Earlier quoted context omitted.

>>There is another side of this that the article doesn't touch on: home ownership. Oh boy. There's so much I can say about this topic, and none of it is positive. Basically, the way our culture mindlessly promotes home ownership is insane. Absolutely insane! Every time I hear people complaining about "throwing away money" by renting, and how they would rather put that money into a house, I want to hold them by the sh…

It's a very simple mathematical error - people compare the cost of a mortgage payment with the cost of a month's rent, failing to take into account that only a tiny fraction of the mortgage payment actually becomes equity. If they actually sit down and work it out, most people are astonished at how much flexibility they sacrifice for that small slice of equity.

That's not even it; in most towns with a 20% down traditional 30 year mortgage, you do very well versus renting if all you count are taxes+interest as expenses, particularly as interest is tax-deductible but rent isn't.

However, you also have to pay maintenance. And had you not put all that equity in your home, then it could be earning above inflation, whereas real-estate in aggregate earns approximately at inflation (if you do better or worse, then you were a winner or a loser versus the average).

Re: The Terrifying Reality of Long-Term Unemployment

#299

Post by aidenn0 »

sharkweek wrote: post #199
saturdayplace wrote: post #184

Earlier quoted context omitted.

At the beginning of a mortgage, the overwhelming majority of your payment will be interest; a very small slice is applied to the principal. Over the term of the loan, those small cuts whittle away the principal owed, which in turn lowers the amount of interested charged each payment (a percentage of the principal owed), until at the end of the mortgage your payment is mostly principal. If you do the math, a typical 3…

As someone who just bought a home -- I can also assure others in this thread, there is a lot of emotional value in owning your own place (reality check -- yes I know the bank owns it for a while) -- but for me and my wife, the value comes from being able to do whatever we want with the house. Expand the basement? Sure! Get a bunch of dogs? Why not! Commit to getting to know the neighbors? Sounds great. All while not…

You obviously don't live where I do; nearly all changes to the house require a permit which takes 6-12 months to get and is quite expensive, and for anything that changes the # square feet (like expanding the basement) will be denied.

Re: The Terrifying Reality of Long-Term Unemployment

#300

Post by ameister14 »

droithomme wrote: post #226
ameister14 wrote: post #156

Earlier quoted context omitted.

I'm sorry, but you don't know what you're talking about. Usually, what happens is, they spend the time looking for jobs they are qualified for and want, and don't get. Then they spend some of their time looking for jobs they are overqualified for as well, and usually don't get. That's 6 months. I've done it. I was unemployed for about a year; during that time I went on about a dozen interviews, did volunteer work, to…

Perhaps part of the problem is poor math, logic and research skills. http://www.bls.gov/news.release/empsit.nr0.htm > Nonfarm payroll employment edged up in March, and the unemployment rate was little changed at 7.6 percent, the U.S. Bureau of Labor Statistics reported today. > In March, the number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 4.6 million. These individuals accoun…

Yeah, you're focused on unemployment numbers after the redefinition of unemployment. That's not as accurate. Technically there were a lot of unemployed left out of the earlier evaluations as well, but this problem is worse now. It's to the point where the data isn't nearly as useful, or perhaps is useful in different ways. Either way it's a very poor tool for measuring long-term unemployed.

Your illiteracy studies? Not particularly rigorous science behind them. Not usually a good sign when what you cite sources no peer-reviewed studies at all. It's interesting that you chose those two places along with the correctional system to focus on, though.

But go ahead, blame my math, logic, and research skills.

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