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Ask HN: What is really wrong with the US economy, really?

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Re: Ask HN: What is really wrong with the US economy, really?

#131

Post by tostitos1979 »

mikeash wrote: post #126
Mz wrote: post #25

Earlier quoted context omitted.

He says: "I live in a studio apartment near Seattle. ... My biggest expenses in the last couple years have been rent, medical, and dental in that order." Medical and dental can be really pricy. So can big city rents. Last I checked, an SRO in San Francisco was $1000/mo or more. Most areas, higher average income correlates quite closely to higher local living expenses. So I wouldn't be so quick to judge.

I don't think I'm judging, but rather asking and proposing/guessing. Let's say his rent is $1,000/month, if that's the biggest expense then rent, medical, and dental together won't be more than $3,000/month. That's a ton of money for basic expenses, but easily doable on $110k/year with plenty left over.

Where did you get 1K for rent? I live in CT and my rent is approx 3K for 1 bedroom + den. Income is a bit higher than OP (10K more annually).

Re: Ask HN: What is really wrong with the US economy, really?

#132

Post by illuminate »

tostitos1979 wrote: post #131
mikeash wrote: post #126

Earlier quoted context omitted.

I don't think I'm judging, but rather asking and proposing/guessing. Let's say his rent is $1,000/month, if that's the biggest expense then rent, medical, and dental together won't be more than $3,000/month. That's a ton of money for basic expenses, but easily doable on $110k/year with plenty left over.

Where did you get 1K for rent? I live in CT and my rent is approx 3K for 1 bedroom + den. Income is a bit higher than OP (10K more annually).

~1k is what a studio costs in Seattle. I pay ~1400 for a large 2 bedroom.

Re: Ask HN: What is really wrong with the US economy, really?

#133

Post by Zweihander »

You're not supposed to save and houses are supposed to cost multiples of what you could possibly earn. Low interest rates for extended periods of time do that. Without getting overly critical of Fed policies, you can also trace a handful of the other issues in this thread to that.

Re: Ask HN: What is really wrong with the US economy, really?

#134

Post by MisterBastahrd »

kevingadd wrote: post #34
MisterBastahrd wrote: post #16

What'd your great grandparents do for entertainment? Probably the radio, some TV, read some books, play cards. Speaking of TV, how'd they get it? Most likely over the air. Phone? Yeah, they had a land line, but they weren't dropping $100+ for a cell phone. Internet? Of course not. House? Probably about 1200 square feet or so, and they likely had more than 3 kids to occupy it. The rest of the world? A recovering war-t…

I think if you list cell phones and the internet before you list housing, your sense of scale is completely off. Even if somebody's spending $200/mo on telephone and internet connectivity, that still pales in comparison to the cost of rent in pretty much any part of the country. A fairly small studio apartment in the area where I live is approaching $2000/mo, minimum - to pay less than that I'd probably have to move…

You can rent a 2 bedroom apartment in most cities for under 900 a month. Spending money for internet + cell + cable entertainment can approach half that. With the median income in the US being $51K, that's about 6-8% of pre-tax income going towards entertainment, not counting eating out, vacations, and movies.

Re: Ask HN: What is really wrong with the US economy, really?

#135

Post by greggman »

kevingadd wrote: post #46
greggman wrote: post #15

Random ramble to follow I know how you feel but at the same time my sister and brother in law make 2/3rd what you make, own a house, a timeshare, raises a kid, home schools, volunteers, her and my nephew are docents at the museum of the pacific, she teaches MS office and other home maker type computer classes (as in how to make a newsletter on your computer), She's in several clubs (the moms club, a bowling club, a b…

'Move somewhere else' is totally missing the point. If everyone moves to those particular low-rent places, that increases the demand there, and rents will go up until housing supply increases to meet demand (or, like SF, it never increases and prices just keep going up). This is ignoring the problem of finding work in low-rent areas (though telecommuting at least makes that less difficult.) To me, 'the problem is whe…

We're not talking about a minimum wage worker. The OP said he made > $100k a year.

I'm not sure what your point is. Plenty of people choose to live in cheaper places for lower salaries or for that matter cheaper places for the same salary. Plenty of people also choose to live far from work and have a really long commute. It's a CHOICE. You make it, you live with it. If you want to live in an expensive place that's also your CHOICE.

I had a friend who lived in Laguna Beach, CA and got a job in Studio City. He then whined about how his life sucked because this commute was so long (~2hrs in traffic). He wanted special treatment because of his hardship. It was pointed out that was HIS CHOICE. The rest of the employees chose to live closer to the company. He CHOOSE to have a long commute because he wanted to stay in Laguna Beach. Eventually he got a job somewhere closer to his house rather. Again, his CHOICE.

I have another friend who moved to Arkansas from Orange County. In Orange County he was paying $1200 (a while ago) a month for 2 bedroom apartment. In Arkansas he had a 3 bedroom house on 1.5 acres of land for $350 a month. Again that was his choice.

The world doesn't owe you a nice place to live in an exciting area of the world for a cheap price.

Re: Ask HN: What is really wrong with the US economy, really?

#136

Post by Hydraulix989 »

benched wrote: post #125
TepidSolarsoul wrote: post #59

Earlier quoted context omitted.

I can't help but feel like you're grossly exaggerating your situation. Convert your rent to a mortgage payment, and lock in $1,500 a month payments (probably around what you are paying in rent right now). The housing prices are only going to go up in Seattle as it becomes more of a tech city (Amazon is building an entire new office in Belltown, for example). Here's a nice (affordable on 110k) house in Seattle: http:/…

This is a good comment. Of course I've seen a lot of these Microsoft effects on the area first-hand (I worked there for 5 years, well after that was any big advantage, of course). Once again though, I am not trying to say that I have it that bad. What I'm saying is that if my own situation qualifies as doing really well, then there is something very fucked up on a large scale.

I'm not sure how it is "fucked up" for you at all. Go buy that $400k house that you can afford if you don't like living in a downtown studio. You'll be among the few millennials that own houses. As it stands, you're in the top 5% of earners in the country.

If you want something more extravagant than the linked Zillow home above, then move out of Seattle and remote work out of your own $400k Pittsburgh mansion.

Here's one of many: http://www.zillow.com/homedetails/5760-Evans-Rd-Export-PA-15...

Sure, the weather is considerably crappier, and the locals aren't as educated as in luxury cities like SF/NYC, but you'll be relatively (in other words, extremely) well off -- cost of living is a trade-off. It's a matter of what you value.

Re: Ask HN: What is really wrong with the US economy, really?

#137

Post by mikeash »

tostitos1979 wrote: post #131
mikeash wrote: post #126

Earlier quoted context omitted.

I don't think I'm judging, but rather asking and proposing/guessing. Let's say his rent is $1,000/month, if that's the biggest expense then rent, medical, and dental together won't be more than $3,000/month. That's a ton of money for basic expenses, but easily doable on $110k/year with plenty left over.

Where did you get 1K for rent? I live in CT and my rent is approx 3K for 1 bedroom + den. Income is a bit higher than OP (10K more annually).

From the "$1000/mo or more" in the comment I was replying to. The "or more" adds lots of wiggle room, but it goes both way: he might be paying more, but he surely has the option of paying less. Moving to cheaper digs is one obvious way to help out your budget.

Re: Ask HN: What is really wrong with the US economy, really?

#138

Post by jpollock »

dangrossman wrote: post #83
mikeyouse wrote: post #67

Earlier quoted context omitted.

1) Those are false choices. If rent is $2,000/month, a mortgage would be far more than $1,500. Just an example, my rent is near $2k in SF, an equivalent sized unit on my block just sold for $700k. If you could put 20% down (just save $140,000!), a 30-year mortgage would be $3,500/month -- 75% more than renting. 2) Get a new healthcare plan through Healthcare.gov. The out-of-pocket maximum is $12,700 for a family plan…

> If rent is $2,000/month, a mortgage would be far more than that Typically, the rent is covering an existing mortgage + taxes + insurance + maintenance + profit. If the mortgage were higher than the rent, the building owner wouldn't be making any money renting it out.

No, it doesn't work like that, because it doesn't take the house's capital gain into account.

Given the ability to grow the housing supply, there is typically a fixed return for a property. That return will be split between capital gain and rent. Rent no longer covers the mortgage because it is the total return that determines if it is a good investment. There are also the tax benefits of renting out a house in some locations (maintenance and insurance would be deductible).

When we rented out our house, we were told that the typical return on capital was 8%, where 2-3% would be capital gain, and the rest in rent. We priced our rent at 5% to get a quick rental. Mortgage rates in that location are 6%.

If it is hard to gather a down payment, then rents can exceed mortgages because renters cannot easily swap between the two.

Re: Ask HN: What is really wrong with the US economy, really?

#139

Post by humanrebar »

grecy wrote: post #84
humanrebar wrote: post #66

Earlier quoted context omitted.

I like frugality, but rushing to live on a fixed income seems like a big mistake. People on fixed incomes are especially sensitive to externalities such as assuming their investment returns will outpace increases in prices and taxes. For example, if increasing capital gains taxes or introducing a consumption tax become popular, people living frugally on modest investment incomes will be hard-hit. Considering that som…

> Rushing to live on a fixed income seems like a big mistake And you've missed the entire point. The point is to live on a fixed income if you want, for however long you want . If you don't want to, just pickup some work and supplement that fixed income. Choice and options is the point.

I understand that point, and to rephrase my objection, I am concerned that people are accidentally trading long term choice for short term choice. There are many aspects of living within one's means that are out of the control of the individual.

For example, if a young person retired 20 years ago, he probably would have done a poor job budgeting for increases in prices for healthcare, especially given what the individual market looks these days. If, after a twenty year absence from the workforce, he is forced to work again, he will rapidly be approaching traditional retirement age with a large gap in work history and limited career options.

Maybe working or volunteering on the side can keep his skills sharp, but how easy will it be to convince potential employers of that fact?

It's possible that people are saying "retirement" when they mean "frequent sabbaticals", in which case, some better labeling of that lifestyle choice would clear up my confusion. Even then, I wouldn't blame a potential employer for being wary to give challenging job openings to sabbatical-takers due to the higher risk that they'll take off.

Re: Ask HN: What is really wrong with the US economy, really?

#140

Post by Mz »

mikeash wrote: post #126
Mz wrote: post #25

Earlier quoted context omitted.

He says: "I live in a studio apartment near Seattle. ... My biggest expenses in the last couple years have been rent, medical, and dental in that order." Medical and dental can be really pricy. So can big city rents. Last I checked, an SRO in San Francisco was $1000/mo or more. Most areas, higher average income correlates quite closely to higher local living expenses. So I wouldn't be so quick to judge.

I don't think I'm judging, but rather asking and proposing/guessing. Let's say his rent is $1,000/month, if that's the biggest expense then rent, medical, and dental together won't be more than $3,000/month. That's a ton of money for basic expenses, but easily doable on $110k/year with plenty left over.

You seem to have missed my point entirely. SRO means "single room occupancy" -- in other words a room like a dorm room where the bathroom is down the hall and shared with the rest of the floor. It's basically a walk-in closet with a bed and maybe a sink. My point was that when I lived in the Bay Area, $1k (or more) bought you a slum in SF of a sort that doesn't even exist in many places. So do not assume a studio apartment in a big city is "cheap." It isn't necessarily true. I recently saw an article on micro apartments in SF that rented for $1850 and were under 300 square feet. SF is probably more expensive than Seattle but that does not mean Seattle is cheap.
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