Half of old Americans have no money saved

Discussion in 'Economics & Trade' started by kazenatsu, Jul 9, 2021.

  1. crank

    crank Well-Known Member

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    There's also the selfishiness of remaining in a place that you then rely on others to maintain. Even if you're paying people to maintain it, that's money which could have gone to your kids, had you not insisted on staying in a place you can't maintain yourself.
     
  2. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    My point was that downsizing very often does not actually make financial sense, even if it may seem to in theory.
    Unless you were already needing to move anyway.

    An exception might exist if home prices are much higher in one area than another, but I presume we are not discussing that.
     
    Last edited: Sep 28, 2021
  3. crank

    crank Well-Known Member

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    Costs are very unlikely to exceed the profit realised. EG if I sold my big family house today it would make $2m, whereas I can buy a suitable smaller place an hour away for $300k. Any transactional/transitional costs (even if I used those high end removalists who pack each piece of glassware individually) would be a drop in the ocean compared to that $1.7m profit.
     
  4. crank

    crank Well-Known Member

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    It makes great sense, in every possible respect. And why on earth would someone do it if they're not going to realise a good profit margin?

    The exception is actually where a large family home is the same value as a much smaller place - which would be very unusual in my country, and likely in the UK also.
     
    Last edited: Sep 28, 2021
  5. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Sorry, I'm simply going to have to respectfully disagree with you. I've laid out the reasons for my position.

    It's also possible the market conditions in my country are different from where you are. Maybe the difference in price between a family home and a very small home are much larger where you are.

    In areas with lots of land and many custom designed homes, you may be right.
     
    Last edited: Sep 28, 2021
  6. Tejas

    Tejas Banned

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    That is a big consideration for me. I have a large 2200 sq ft ranch-style house [all on one level.] I bought it because it was close to both my work and my son's school [single mom.] A few years ago I had to replace my roof and it was very expensive. Now that it's just me, I don't need 2200 sq ft and I certainly don't like the extra cost of maintaining it [including heating and cooling it.] Also property taxes here are expensive... the bigger the house, the more the property taxes [but at least Texas has no state income tax.]
     
    Last edited: Sep 28, 2021
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  7. Tejas

    Tejas Banned

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    Sometimes it doesn't. That's why I still live in my large house. In spite of the extra cost of maintaining it... because it's paid off, it costs less for me to live here than renting a 1000 sq ft apartment with no garage. One of my favorite things about my house is the garage where I park my car just a few steps from the garage entry to my kitchen area [really convenient, especially in bad weather.]

    .
     
    Last edited: Sep 28, 2021
  8. Tejas

    Tejas Banned

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    lol

    I understand what you are saying... and I agree.

    Working for the government is a progressive form of slavery. Pretending to work for the "master" isn't so bad when all your needs are well taken care of... you ever notice, the White House was built like an old Southern mansion.

    .
     
    Last edited: Sep 28, 2021
  9. crank

    crank Well-Known Member

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    1) You're predicating your opposition to the concept upon the very unusual circumstance of a large family home being around the same value as a much smaller property (smaller in both in land and building size). It's far more common that a big home with more land is worth more.

    2) The conditions aren't that different, it's just your lack of exposure to this as a retirement concept. And remember that people aren't necessarily moving one street away when they do this - they're often moving to a cheaper area. That's how the most gains are made. You profit from the higher sale value of the family home, PLUS the lower purchase values in the cheaper area. This happens in America too.

    3) I have no idea what 'custom designed homes' means, sorry. If you mean architect designed, then yes of course - they're always worth millions. If you mean a McMansion (custom or not), then no. In this country those kinds of houses are regarded as badly designed tacky rubbish, and they're almost always considerably cheaper than much older houses. Example:

    [​IMG] We would pay less for this grotesque pastiche,

    than we would for this refined beauty:

    [​IMG]
     
  10. Tigger2

    Tigger2 Well-Known Member

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    I can't speak for America, but in the UK housing stock is a very safe investment. Least hit by recession, first to recover.
    So I don't see my claim as a generalisation.
     
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  11. Tigger2

    Tigger2 Well-Known Member

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    Oh that codswallop. The one that assumes getting a mortgage is just down to making a good decision.
     
  12. Mircea

    Mircea Well-Known Member

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    So he says sitting in the comfort of his council house.

    Which builds Wealth: Putting 0% down on a $250,000 McMansion and paying $250,000 for a McMansion, plus paying $318,000 in interest.... ...or... ....Saving money to put 20% down on the $250,000 McMansion and paying only $79,956 in interest.... ...and then use $238,044 saved to invest or save or both to build Wealth?

    Do you need some coaching on that?

    An idiot could put the $661/month they saved on interest into savings account and after a year they'd get 4.0% and end up with $460,000 which would give them an extra $23,000/year on top of their Social Security and 401(k) or pension.


    .
     
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  13. Mircea

    Mircea Well-Known Member

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    No, the cost of housing has gone up as much as 30% in some of the 120,000+ housing markets in the US but not all 120,000+ housing markets.

    There are housing markets that have declined in value. They are not the majority, just as markets seeing a 30% increase are not a majority.

    Where it is applicable may be a consequence of Interest Inflation, which inflates the prices of certain goods tied to interest rates.

    Cars are an excellent example.

    Your interest rate on your Toyota is 28%-36%.

    But, wait....aren't you getting 0% financing from Toyota?

    No, because the car costs $16,000 with a 20% profit margin and Toyota adds $6,000 to the sticker price jacking it to $22,000 and then tells you that you're getting 0% financing.

    Congress could fix that by enacting a law that bars the auto-makers from financing their own vehicles.

    I mention that because I have a few colleagues discussing a TILA complaint, you know, the Truth-in-Lending Act since Toyota et al are not very truthful, but then Toyota has always conducted its car sales using dishonest means.

    But, yes, low mortgage rates can inflate housing prices.

    Congress can fix that, too. They can bar/direct Fannie and Freddie not to back mortgages for those who already have a mortgage on a home. That would force lenders to tighten their lending standards.

    Yeah, that's right. Flipping becomes really unattractive when you have to put your own home up for collateral.
     
  14. Tigger2

    Tigger2 Well-Known Member

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    I have no idea what you're waffling on about. I don't live in a council house, I own a medium sized business and employ about 105 people.
    I am however one of those peculiar people who would be happy to pay more tax as I can easily afford it. I struggle to understand why other people who can easily afford it go to such lengths to avoid paying their share.
     
  15. crank

    crank Well-Known Member

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    Of course it is. If you start your working life with that end in mind, then you'll manage it even on a working class income. That means living below your means from day one .. and saving like a maniac until you've accrued your downpayment. Anyone can do it, but many people choose not to. They prefer to 'have fun while young', which is code for blowing all their money.
     
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  16. Tigger2

    Tigger2 Well-Known Member

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    You missed, Not being made redundant, not getting ill, not suffering trauma or life changing events. Basically you missed being human.

    Oh, and everyone should have fun when they're young, it should not effect their life chances. I'm sorry you missed out and its effected you so badly.
     
  17. crank

    crank Well-Known Member

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    1) That's why we should plan from day one. Because life will almost certainly visit difficult times upon us at some point. The earlier we start, the better we can withstand those times. Again, that's the point of the excercise - because we ARE human!

    2) Why do you think 'saving from day one' and 'fun' are mutually exclusive? That's a bizarre outlook, but it seems to be common in a lot more young people in the West, than it is in other cultures. It's as though they're not aware there's an infinite variety of ways to have fun. Nor that a huge number of fun things are entirely free - or at least very inexpensive. It also completely ignores personal preference - which suggests you think all 20 year olds like exactly the same things. Like I said, bizarre.
     
    Last edited: Sep 30, 2021
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  18. Tigger2

    Tigger2 Well-Known Member

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    We but we ARE human.
    It was you who made them mutually exclusive. You said:
    Anyone can do it, but many people choose not to. They prefer to 'have fun while young', which is code for blowing all their money.
     
  19. crank

    crank Well-Known Member

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    1) Exactly. That's why we need to plan well ahead .. to allow for variations in the human experience!

    2) You'll note I placed it in quotes .. which was to indicate that that's the kind of thing youngens often say in defence of blowing all their money.
     
  20. Tigger2

    Tigger2 Well-Known Member

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    But part of being young is not earning much and blowing it all enjoying your new young life.
    Those life memories (To me) are far more valuable than being a bit more comfortable when you retire.
    But as I say there is no reason for our children not to have both, so long as the rich don't weight the dice.
     
  21. crank

    crank Well-Known Member

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    Fun and spending money are not inextricably linked, though! There are loads of things young people can do for fun which don't involve much - or any - money. Camping, hiking, cycling, sport, various clubs, religious groups if that's their thing, music groups, etc etc. My kids are saving like maniacs towards property purchases, and they manage to do lots of very social low cost or free stuff. It's all a choice, isn't it. You can choose to blow you money on clubs n booze, or have just as much (I would argue much more, since it's sober and real) fun AND save for the future. The memories are made via the fun and the people, not by how much money you spent.

    And there is no entitlement to 'fun' so great, that you get to make yourself a burden later in life. That's a sh!tty choice, no matter how you look at it. We all have an obligation to avoid burdening the public purse, in any way we can. And we have to start young. It's those who don't start young who end up costing society.
     
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  22. Mircea

    Mircea Well-Known Member

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    So, what's stopping you?

    You're free to do that anytime you want.

    How much additional tax do you pay of your own free will every year?

    I'm guessing you don't practice what you preach.
     
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  23. Tigger2

    Tigger2 Well-Known Member

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    Because me paying more tax alone would not make enough difference. But if all those in the UK earning more than £80,000 ($110,000) paid just £1,000 a year more tax, this would raise an extra £1.5Bn a year. And we wouldn't even notice it.
     
  24. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    That's only because of mass-immigration policies and a dire chronic shortage of housing.

    you can see my economics thread here: Non-classical forms of market rationing
    It's about how a situation can arise where price levels are very resistant to any change. (Rather than the conventional conception of supply & demand where prices change)
     
    Last edited: Oct 17, 2021
  25. Tigger2

    Tigger2 Well-Known Member

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    Agreed, but that is supply and demand isn't it?
    I'll have a look at your thread.
     

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