Personal finance experts don’t get wealthy by following their own advice

There are multiple metrics here, but many people talk about the price of home ownership, as in a house.

And in that context, yes -- people are buying mansions. Even at 3000sq foot house is 'large' by 50s or 60s standards. Only high-end middle class would ever contemplate such a monster, in the 50s. The average middle class buyer would opt for a "normal" sized house, 1500sq.

Yet many people today buy massive houses.

Look here:

https://www.aei.org/carpe-diem/todays-new-homes-are-1000-squ...

Notice this trend is from 1973 onward. It didn't start there, meaning, houses were even smaller in the 50s.

This does matter, for it does indeed effect price. Build costs, outside of Seattle, New York, San Francisco, LA, are what costs typically, not land price. A bigger house means more maintenance costs, too.

What has enabled this? Massive, low interest mortgages for anyone, qualified or not.

And what has that done to housing pricing? Pushed it up. Low cost mortgages cause an increase in housing costs, because people can suddenly afford more. An example (approx)?

330k mortgage @ 3%, approx 10% down? Monthly payment = 1500/month.

330k mortgage @ 10%, approx 10% down? Monthly payment = 2900/month.

Look at it this way:

600k mortgage @ 3%, approx 10% down? Monthly payment = 2950/month.

So a person today can literally afford a house twice the price, just by the interest rate changing from 10% to 3%.

Why is it important?

Well, bidding wars happen all the time for housing. If people can afford more, they'll bid more. Now, change doesn't happen overnight, but it certainly does! And that means that over time, pricing increases faster than inflation, for, people can afford more for the same payment.

In a seller's market, which happens every few years, up the price goes!

https://tradingeconomics.com/united-states/interest-rate

Click on 'MAX'.

Now look at 1980. Holy! Yes, 20%. And I assure you, it was actually a little higher in some locales.

330k mortgage @ 20%, approx 10% down? Monthly payment = 5200/month.

My point in all of this is how dramatically interest rates change affordability of housing. And how it has allowed "McMansions" to appear, massive houses dramatically larger than things 50, 70 years ago.

Back to this:

As-if the majority of folks today having troubles finding an affordable place are looking for mansions".........?

The problem is, even 'smaller' houses are 'large' by prior standards. This is why I have been discussing 1500sq ft homes, and how they are very affordable outside of massive, high density cities.

People don't have issues with housing/rental costs in rural Kansas, or in smaller cities. Not like the Valley, or Seattle, which is what the majority of people here are complaining about.

OK.. on to the next point.

You draw this comparison of what people in the 50's would think of our world today when in all reality the cost of everything has skyrocketed since the 50's. The dual-earner expectation is a new thing since then, the post-WW2 credit boom happened, the expectations of higher education to enter careers is different, housing markets are night and day, etc... Anyone who's looking at this modern world through the lens of the 50's ideals must realize that this is an incredibly skewed/distorted way to think about today. Or at least I would hope they realize this.

The cost of many things has skyrocketed, but other things has plummeted.

With respect to dual income earners, that one is simple. Over time (and 70 years is a long time), inflation and wage pressures match expectations. For example, double everyone's salary, and within a decade (theory states) that pricing will adjust to available buying power. Just as with my housing example, low interest rates enable higher housing prices.

And more available cash in everyone's hands enables an increase in commodity and pricing of goods.

(BTW, virtually every article you read on housing pricing plus low cost mortgages backs up my logic, with articles also discussing what would happen to the housing market if interest rates even just doubled -- yes, a crash. This logic holds with all pricing.)

My point?

Create two income earners in households and slowly over time? That extra cash just becomes normal, and pricing of things reflects that.

But back to pricing skyrocketing?

Not gas prices:

https://inflationdata.com/articles/inflation-adjusted-prices...

Or electricity:

https://www.in2013dollars.com/Electricity/price-inflation/50... (Between 1950 and 2021: Electricity experienced an average inflation rate of 2.99% per year. This rate of change indicates significant inflation. In other words, electricity costing $100 in the year 1950 would cost $810.18 in 2021 for an equivalent purchase. Compared to the overall inflation rate of 3.45% during this same period, inflation for electricity was lower.)

It doesn't end there. Food pricing is lower. Household incomes are higher.

All of these comparisons you've drawn make me feel like I'm suppose to feel guilt for having purchased things with credit as well... admittedly things like TV's, etc. I've never paid "2-3x" for something as I've never fell for that trap... but I have purchased expensive things like computers and used my credit to spread that hurt out over a year...

This isn't about guilt, just reality. And maybe you're not in that trap, but endless consumers are, and they are paying 2x or 3x the cost of everything they own, as a result!

Credit/debt is the basis of any capitalistic society - it's literally in the blueprints. If you truly believe this I would argue you have a fundamental issue with capitalism as well.

No, heh, no it is not, at least not in the context we're discussing. Capitalism didn't start in the last 20 years.

For example, getting a mortgage used to be highly regulated, with stringent checks on ability to pay. If the housing crisis taught us anything, that's not true now, and even after 2010? Things are incredibly lax compared to the 50s.

Look at credit card approvals? Most people didn't even have credit cards in the 50s. Or revolving lines of credit.

Credit has nothing to do with capitalism. Nothing. Capitalism is about a lot of things, but not that.

Or, did capitalism not exist in the 50s?!

What's changed is that credit is freely available now, far more than ever before. And this causes "false wage increase" syndrome, for lack of a better term.

Back to this:

I do not disagree that credit is a problem. But it is not the "more than anything" problem. Actual livable wages for veryone willing to work is the "more than anything" problem.

and from your original (for context):

> Fifty years ago that average person would have been able to support a family, buy a house, and not live under the constant threat of bankruptcy from a surprise medical bill.

Thing is, that's not true for everyone. If we're talking about "people who would buy homes in the 70s, or 50s", then what I'm talking about is valid for that income earning class of wage earners.

And wages for that income class, are up! The problem for "middle class" america is "too much credit" and "paying absurd amounts for that credit".

Not sure we're going to agree here though.

I tend to agree - big tech (and the work economy in general) is somehow managing to squander vast amounts of human potential, and leaving billions of dollars on the table in the process.

Pigeonholing - where people are expected to perform the same task every day, in the same domain, for years on end - is certainly part of it. Humans are not robots. Rather, they thrive on growth, variety, and learning to do new things. But growth is considered a cost center at most companies, and variety is typically forbidden.

Tying people to projects - and punishing them for switching projects autonomously - often results in work being done slowly, poorly, and even resentfully.

Usually the reward for completing one's tasks efficiently is simply to be given more work to do. Presenteeism trumps actual productivity.

I wonder if Valve is still - or was ever - operating with a "work on whatever you want" system, and I wonder how well it could work in practice.

Surely there is some necessary and unpleasant "grunt work" that nobody will want to do, but presumably if it's important then some agreement could be reached to get it done anyway, rather than simply ordering a low-status person to do it as usually happens at a traditional company.

It works much better for me than trying to save at the end of the month for me anyways.

You 100% can become a multi millionare as an employee. You can go the SV route and make $300k+ as an engineer or go the traditional route and make $100k working as an engineer remotely in a low cost of living location.