Why Most People Can’t Afford A Home & Car
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- Опубликовано: 8 июн 2023
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Thanks for watching, I appreciate you!
"Banks are not your friend"
This is one of the top rules of life, once you get that life becomes so much more enjoyable.
so where are we supposed to store money then?
The problem isn't the interest rate, it's that the median price has gone from 250K to 440K.
Interest rates were over 10% before and people could still afford a house.
You are correct. Its the fact that if you earn a middle income the lack of housing in the 200K to 300K range is missing. They have been bought up already.
people are demanding more pay witch means companies have to raise there prices
That’s a consequence of demand far outpacing supply.
But, the mortgage interest rate can be manipulated to overcome the explosion of the median price.
After my wife went back to work our income with 3 kids was $50,000 a year. We bought a $145,000 house and it was hard to keep up with the maintenance. Something is wrong with our Country with most young people unable to buy a home
$50k a year with two incomes? Is it below minimum wage? Change a job bro, I am making $500k by myself and my wife doesn’t need to work at all
500k a year buddy ya ok what u are a top doctor?? U own the ford company? I think u went over
@@MK-xw1rp ever heard of FAANG? Google it up if you never heard of it. Even entry level software engineers start with 200k a year here, most experienced software engineers make more than US president ($400k)
Always compare the price of a new car with the price of a used car. At my Toyota dealer, the price of a used and new Corolla were pretty comparable every time I have bought a car. I am older…65. In the 70s when the price of gas skyrocketed the manufacturers went to smaller cars, and that is what the public demanded. It seems like now people demand the top of the line whether they can afford it or not.
Here is a secret you should know. The Jones’s have their 3rd bankruptcy on the horizon. I don’t need to be the Jones’s cause I am just fine on my itty bitty pension. Cause I learned through out my life to live comfortably and below my means.
A car and housing are the two biggest expenses, but, you cannot leave out the “expense” of wealth creation. By keeping your transportation and housing expenses low, you have more money for wealth creation (through investment). Time is on your side if you start early in life and live well within your means. The saddest sight is seeing someone needing to work well beyond retirement.
When I was younger I bought cars that I shouldn't have which also led to higher and higher credit card debt. For 8 years I drove around in beautiful cars but those years are now filled with regret. I turned things around and set a limit of 25% DTI for ALL expenses to make up for lost time and continue to live that way today, 20 years later. I learned that true freedom wasn't driving around in a convertible with the top down. It was having the peace of mind knowing I was financially sound.
So true. A few years back, I admired a BMW that a neighbour was washing. She asked if she could help me, and I replied I was just admiring her car. She said she was killing herself to make the payments on it. My guess is she was 5-10 years older than us, but we're probably way ahead of her in saving for retirement...
I love the 25% DTI rule you have for yourself!! I love to keeps debts as LOW as possible. Because as you said, there’s great piece of mind ins being financially sound!
Facts. Now more than ever people are swayed by social media trying to impress people I as of doing what you should to prepare for the future and live within your means and build a life and have retirement
Erin! Most important comment here… thank your husband and your commitment to service! 👍👍
I feel completely hopeless about home ownership. I make a good salary but the prices in my area have increased so much in the last 2-3 years along with rates more than doubling, there is almost literally nothing I can afford. At the same time, there is also not much inventory available which is partly what keeps prices so high. I don't know if people are going to own homes in the future unless something major changes.
If they cannot sale houses they will rent them but either way rent will be higher
Be prepared for the next housing market crash. Many foreclosures nd prices drastically reduced unless the feds reduce the rates which i don’t see them doing any time soon. Have your money in the bank and keep your credit score high so you can be ready!
Just tried for a 300k, and the need 28k cash to close plus 8 k for buyer agent. Then I'd see a 2200 pm mortgage.
Its not realistic at all and I'd have to borrow 401k for a 6 percent dp on a conventional loan. I have great credit and lending approved but its too much for cash to close to get to that poker table.
My rent now in a ghetto area is 1,000 so...guess im stuck
You could move to a cheaper state to live. Not that difficult if you are willing to humble yourself
Ten months later the situation has only deteriorated
My rule tends to be “DIY as much as possible, and do a balance of quality and cheaply or don’t do it”. If I cant, then I content myself without (not that hard to do because contentment is a state of mind, not a state of being…). My house is paid off and my car was bought cash and I’m saving as much as I can while still being able to live a little and enjoy the little “luxuries” I can afford.
you have to think about how much money you make "per hour" and think about whether DIY is worth it. If you can get someone else to do it for less $$$ per hour than you make, maybe its worth paying someone else.
@@hockey1freak - this can be true to a point, but the other side that’s never spoken about is: are you able to increase your hours to pay for that, or does it come out of your normal working hours? If you can add as many hours as it takes to do the project, I’m all for it, but if your hours are set, then you’re cutting into your budget. You have plenty of extra hours yourself for diy, but if you can’t use those hours to earn your normal pay rate then, in my way of thinking, this strategy of paying someone else to do something with your regular earnings falls short and reduces your quality of life.
I have done tons of things myself that have vastly increased our quality of life: replumbed my house (ranch with open ceiling in basement so not really difficult), new roof with the help of a few friends, built a chimney for a new furnace, installed a lot of electricity/outlets, painted inside and out (I was a professional painter for a decade, so that was a no-brainer), built a lot of furniture (with beautiful curly maple), built my own custom guitars and basses, refinished our hardwood floors (buddy of mine had a flooring business and lent me the floor sander), built the cabinets in our kitchen (same gorgeous maple), installed cork floors in our kitchen and bathroom, replaced all the fixtures in my bathrooms, installed my own generator and automatic transfer switch and ran extra electrical lines for manual transfer of necessities, researched and created our own luxury mattresses by buying two on sale coil spring/no padding mattresses and buying the memory foam as a topper (5lb, quality stuff from the manufacturer, not available in stores) - when the foam wears out as it always does, we just replace the foam for pretty cheap and that mattress will last our lives (and one in the guest room that’ll outlive us), cut our own trees, fix my own car (brakes, shocks, and the easy stuff..), and the list goes on, and on, and on. This is not to brag, but to point out that: 1. It’s fun to learn new things and take care of your family in visible ways, 2. I couldn’t have afforded to do 1/8 of that if I had hired it out, 3. We live much better, and in much more ‘luxury’ than many, and our income is not very high.
I have heard the philosophy of “don’t do it yourself if you make more an hour” a lot before, but it never made sense to me in my situation (fixed salary, no opportunity for paid overtime, but a side hustle business to pay for supplies to do extra-bugetal projects). My father, however, who worked a blue collar factory job in a department where there was as much overtime as you wanted every week (he worked 3-4 double shifts per week) was another story, as this was a much more lucrative way to make more money (though he and my mother did most of the work on our home themselves until they were 65ish…).
We all have our philosophies of living, this just happens to be mine. I’d rather spend the time I would normally waste to do productive and money saving things myself.
I am right with you! Whenever I buy a “new” car or other item, I teach myself how to fix it because something always comes up. Over the years I have acquired tools (used) to fix most of my stuff. It is amazing how much stuff that shows up in thrift shops and tag sales at a fraction of their original price! Although I don’t make a lot of money, I too, know what to look for when I am scrounging for the little luxuries I can afford. I put an hourly price on the items I acquire, in that, how many hours of work am I willing to give for an item. You actually trade hours of your life to live. A $30,000 car would actually cost you 1000 hours of your life at $30 an hour! This of course ignores taxes, interest, loss of opportunity, etc. and is just a nominal value to keep things in perspective.
Van down by the "River".
Generally with a paid off car there is still two things to consider: Either the amount needed to cover upcoming costs to maintain and repair it down the line, or towards replacing it when the current car feels too expensive as parts need to be replaced(of course this 'car payment' benefits you mildly as you can gain interest on these payments/savings). This is often cheaper than buying a new car certainly, but you're never really saving money by having a car(even a paid off car), and especially by driving it.
100% and mitigate the parts and maintenance cost by saving up an extra 10% and buying Honda/Toyota for cars and small suvs.
I made sure to avoid Hoa's when I bought my home back in 1997.
That was really interesting, thank you. I’m convinced that the best financial decision my wife and I ever made was buying our condo. It was a scary proposition at the time but my grandfather sold it to us in 2014 for $210K, which was about $25K below market value at the time. We have a very affordable mortgage payment, we’re in an excellent community and have plenty of space as presently constituted. Our home has enabled us to build our wealth in ways we otherwise never could have.
The average American is over their head on their vehicles. I see full size trucks and full size SUVs as being very prevalent on the roads. Next up is the smaller SUVs. Sedans are at the bottom of the list as far as numbers, but yet they are probably what most should be buying.
100%!!!!
Another piece of advice is once you pay off your car, keep putting that same monthly payment into a saving account so you can pay cash for your NEXT car and never have a car payment again!
Great tip! I always did that and just called it my car fund!
A better place than a typical Savings Account would be a CD Ladder... Yes... you will have to pay an Early Withdrawal Penalty for taking back your money.. but it's typically a matter of a few months to a year of interest... What is "reality" is if you held those CDs LONGER than the EWP it's just a wash with "time".. I would much rather pay an EWP of 9-12 months of interest than finance a vehicle for 8-9%
As a Canadian......my advice is wait...put money aside and wait for the crash.....
This is what I did in 2013, I bought multiple property in WesPalmBeach FL...original owner pay $180 000 (2006) got it for $45 000 cash shortsale from the bank.
And inspite of being able to qualify for that 30year loan with the front end income to debt ratio of 28% many followed Dave Ramsey's advice of not to buy until you can qualify for the 15 year loan.
Following this advice kept many from buying a house with a low fixed intrest rate and turned them into lifetime renters with the rent payment eating away 35/40% of their income .
I think Ramsey's advice is good to motivate folks not to over-extend themselves, and even though it might not look so great at this moment, it might look better again a few years down the road, assuming rates and home prices decline once the economy slows (or crashes)...
30 years is a LONG mortgage to pay off, with a TON of interest paid over the decades. I'd rather pay more rent for a few years than more interest for a few decades.
Fair point!
Perhaps, but it also kept you from buying more than you could afford and being miserable in a home with no money. You can always buy later and can refinance when rates go down....which they will. We may not see 3 percent rates again, but when rates were that low people had to way overpay for their homes. This will get better...and where you decide to live makes a huge difference.
@@dstevens518 30 year mortgage doesn't mean you have to take the 30 years to pay it off
During the last few years we had historically low interest rates and D.Ramsey was still discouraging many from being homeowners till they can qualify with a 15 year mortgage -- even though the spread between the 30 and the 15 year rate was a meager 0.50%
Why take on the risk of the higher 15 year mortgage payment if you can qualify for the 30 year mortgage? especially if you have the option to make a voluntary payment towards the mortgage to keep it on the 15year ammoraxation schedule
Or better yet you can take the difference between the 15 and the 30 year mortgage and invest it . This way the appreciation will give you the option to pay off the mortgage in 15 years and keep the remaining funds invested towards your retirement .
This is an option you will not have with the mandatory higher payment on the 15 years mortgage.
@@Summerdee223 the thing is everyone talks to refinancing, which is great in a market heading upwards, but try to refi when your house goes down 20%, nobody talks about that.
You're correct - it's all location based for housing - the median house price doesn't really mean much.
Yeah where I live you can still get a good quality starter home for just over 100K and I'm within commuting distance of multiple cities of 100,000+ population so while it's a bit rural, it's not like it's the middle of nowhere.
If one value's their wealth then NEVER NEVER NEVER buy a German car used or new. As a technician I know. You've been warned.
this is laughable. We've only owned BMWs since our first 1983 318i, keeping each around 10-15yrs. As an actual German car owner, you don't know what you are talking about.
@@hanwagu9967 I, my friend, do know what I'm talking about. I work on these money pits all the time. BTW, I'm part Kraut.
@@southbound1969 You sir, are correct! The electronics and overuse of plastics under the hood have made German cars “money pits.” The rule of thumb is to unload it at 50k miles (and take a beating on depreciation), or just lease it. In any case it will end up eating a hole in your pocket. People don’t think why a used German car is so cheap-it’s because they are so expensive to repair (parts and special tools).
We are becoming a nation of renters as the cost of housing rises faster than inflation. I couldn't afford the buy the house I live in now that I bought in 2016. It has gone up over 400k in value and interest rates are much higher today. I have a 30 year 2.875% rate until 2050 so I cannot afford to move even though I would like to.
I think that’s actually a huge point now, with interest rates where they are, so many people feel like they can move, even if they want to.
I enjoy your videos, thank you
It's worth noting that the median household income of $70k often includes two or more earners. If you have two earners, you are likely to need two cars which means that how much car you can afford should be based on an income of $35k per year as opposed to $70k per year. You honestly can't afford that nice of a car on a $35k per year income.
Not sure we knew any of these rules when we were first married. But we stayed in our first house for 24 years and we only bought used cars or kept new ones for at least 10 years.
Great video Erin!
awesome! what a star!
nice videos
Good video. Some advice from your "grandpa"...I'm 57 and retired. Control your debt, drive and maintain cars that are paid for, earn pensions and health care if possible, save for retirement, know that there will be hickups and road-bumps, and know that over time your income will go up and your ability to save will go up. Use the 28/36 rule as a guideline...not a goal of "I must spend that much." The goals are to both enjoy life now and attain financial freedom. But, no matter how well or not so well you are doing on these things...always remember you are a unique and beutiful creature...the most buetiful God has made...and are always lovable. Always take care of yourself first...and those in your life...this includes making wise money choices...but that is only the beginning...not the end.
Awesome video I really enjoyed
Glad you enjoyed
Possibly your best video yet.
Awesome information, Erin!
Keep up the great job.
Carpe diem!
Thanks Todd!
@@ErinTalksMoney Great video, you personally know service and sacrifice, my son is a Navy Commander and they have moved around too. The upside is that once out, you have lots of friends around the country and job opportunities will be there. A proud DAD and Vet.
this eats away at me every day, washington needs to stick up for the little guy. Instead we have every rich person and investment company picking up these houses for inflated prices to flip them for a profit or to rent them out...enough is enough
We need a rent-to-own program similar to the Finnish model.
Everything is based from gross income I think that is a mistake should be based off of net because federal and state taxes, medical, ss are taken out. Then you have a more accurate picture
Good to see a young person with their head on straight.
Great video!
Thanks!
Interesting topic to cover Erin.
Glad you think so!
I live in an affluent area. There are no homes for $436,000. Either smaller older houses for $225,000 or new bigger homes for $800,000.
Love Newport. Thought about living there when we got married. Co-worker lives there. Though he bought long time ago. Big fan. Like your approach to life.
This is a great video! We are right at the 36% rule after adding two car loans in the past year, but i have an advanced OCD budget plan to drop down to just the mortgage in 2.5 years. Can't wait to bolster that savings percentage then!
We 'fell' into the 28/36 rule actually. I built our budget around getting at least 25% in savings first, then backfilled mortgage and car loans.
Also, RI Rules. Grew up there and loved Newport and the beaches in South County.
Glad to hear you are aggressively paying those off!! Rhode Island has been absolutely wonderful, we’ve really enjoyed living here
Yeah, I had my 12 year old car melt down in July of 2022. 3 year old cars were selling for sticker price if you could find one. Had to get a loan and then liquidate some assets to pay off the loan. 😮
Great video :)
I think it’s important to realize what Erin just said here. She can’t afford the home she wants and where she wants. So she went where she could afford something acceptable. This is what you have to do. This is what I did in 2008 I was 21 and went to a smaller city to buy what I could afford. Too many people buy what they want whether they can afford it or not. Buy what you can afford it will be worth more later you will build equity and then years down the road you can sell and buy what you want.
Absolutely. The spirit of our times is to demand what we ‘want’ instead of what we ‘can’. It’s such a defeatist way to go through the world.
Well said. Life is a journey with lots of twists and turns. When I started in tech there were few jobs and lot of layoffs, like now. Ended up moving to a small desert town to find a job. Saved and saved, moved several more times. Today we have a nice paid for home and retirement looks like it will be great.
My husband and I are both very by the numbers, if it’s not in the budget the answer is no. It’s not emotional or personal. Are there things we have wanted in life that are outside the budget, of course! BUT we don’t get them until we can afford them. We are working together to build a good financial future. That requires sacrifice.
although I a Malaysian, I love your content!
When they can’t sell 2500 sq foot homes. They will go back to building 1200 sq foot homes. All of the sudden homes look a lot cheaper. The typical home is to big. So quit thinking that way. My first home was 1000 sq feet. Was great.
Great point!
Yes, we use these percentages to buy a car and a house for the past 25 years. The %’s have kept us from being house-poor.
This is why home prices are starting to fall in many areas. And there may be a silver lining. The Fed has talked about pausing interest rate hikes. This will no doubt be followed by a decrease in interest rates.
My high yield savings account interest rate just increased yesterday... 😬
@@fs5775 Yep. We buy T-bills and bonds and they are up a bit. However, if the Fed starts decreasing or pausing interest rates increases the yield for these and subsequently savings account will start dropping.
Unfortunately the price of a gently used car (which could come with underlying problems you don't see) is getting close to the price of a new car which has at least the initial warranties. We have researched what cars hold their value AND after 7-10 year are the best "bang for your buck" (price of car plus maintained required to maintain plus known common issues). This has been a real eye opener (I believe Toyota Brands were at the top actually since you mentioned the RAV). Thanks for the thoughts and helping us think through more ideas!
The pandemic certainly changed the car market - new and used were almost the same price! I’ve been seeing the market get more towards normal. And I honestly don’t have anything against a new car - as long as it’s in the budget 😊
Erin 🔥
Great video Erin! You said you would love a "big yard for your dog" but Peanut is so small I think a tiny yard would be just fine for him!
😂 you might think that, but I take peanut to play fetch EVERYDAY- it is his favorite part of his day. And that pup can catch a frisbee or ball mid-air halfway down a soccer field. He wants a big yard, haha
@@ErinTalksMoney a Yorkie playing fetch must draw a crowd!
Your dog is not your child.
In my area, rent is basically the same (or even more) than owning.
Plus, unless I did something stupid like take out a loan on my house, my mortgage payment will never go up. In the same time it will take me to pay it off, rent prices have gone up 600%!
Hopefully younger people haven’t totally missed the boat, but I think the prices are going to drop due to higher rates (which historically, aren’t even that high).
As far as cars, I will never buy new. Cars last so long now, it really doesn’t make any sense!
That’s is a huge point, once you lock in Al that mortgage, you lock in that monthly payment! Rents always go up over time.
I owned a house and hated it.
I have a tiny home on a small lot and I paid 79K for it and bought a 9 year old car for 8K and I make 36K a year. Its all about buying what you can afford and not wanting what you cant have.
As a mortgage loan officer for 26 years, I take issue with who tries to pump up the prequalified amount for buyers. No loan officer wants to butt up against the highest amount a buyer can get because everything can go wrong during processing . Buyers tend to push us to try to get that dream home that they really can’t/shouldn’t afford. I understand it in this terrible rate and appreciation market but I like to get loans approved not denied…
This is why I'm mitigating the price of a car (and eventual house) replacement with a heftier downpayment than 20%. Just maintaining my current car and driving defensively so I can afford to wait longer 🤞🏾I wish I lived in a place where I didn't need a car, though.
Cars aren't depreciating like they used to. CNBC cited studies that well-maintained cars are lasting longer than they used to. They have also gotten safer over the years. So putting up a more than typical downpayment holds more cash value in the vehicle than it did before. Not looking to make a profit on something that's more like an appliance, of course!
I wish I lived in a place with no need for a car as well! Thanks for bringing up that cars maybe better holding their value these days, I’ll have to read into that. 😊
Erin, I would hire you as my financial advisor !
Another great video. I wouldn't buy a house that I don't have 20% down for. PMI is wasted money and if I don't have 20% down, then maybe I am trying to buy more house that I can afford. I also save up for a car, over years, and try tp pay for it in cash. If I had to finance, then I would aim for the 3 year loan and strive to pay it off early.
I always thought that would have been my stance, but I actually changed my mind when l I when to buy my home. I put 10% down. So roughy $36,000. If I were to put 20% down I would have had to put $72,000. Or I could leave that other $36,000 invested. My PMI is $20/mo. I would rather have that other 10% invested and making money in the market. Especially since I don’t plan on owning the home long term.
You need to get in the game, it won't matter what DP you put down, the house will have your name on it i not rent receipts.
Terrible state of affairs for Americans
people shouldn't automatically move toward buying a house. If it doesn't make financial sense it doesn't make financial sense. Home ownership isn't the end goal, financial security is. It would be nice if personal finance folks would use the same analysis on affording a home or car to having a kid or pet. Having a kid is perhaps more expensive than a house, so why it is not included as one of the or most expensive purchase/expense is beyond me. I don't think I've heard a single personal finance person ask and analyze can you afford a kid and having a kid should be x% of your gross income. Pets should be included in the can you afford one category of home, car, and kids, too.
A home is one of the few means of wealth-building available to working class people.
I’m curious why you chose to buy a house if you plan to move every two to four years? Wouldn’t that end up costing more in the long run then just renting?
I had the same question.
It was a good opportunity for us, and we were ready. Found a place that we could do some improvements on - added an additional family/living room, bedroom and bathroom. Perhaps we will keep it to rent, perhaps we will sell it.
not necessarily, but also remember that she's married to active duty squid, making them eligible for VA loan.
Still good to have built some equity versus not while renting. They can sell and hold on to the profit in a high yield savings until they come across another opportunity or rent it to other service members who would prefer renting over buying until they’re ready to cash out for retirement or they’ll have their home to come back to if they get stationed there again and won’t have to deal with the hassle of finding a home or apartment. My coworkers rent and sell to each other all the time. Very convenient network we have amongst ourselves.
Most cant afford to follow these rules due to insane prices nowadays
I'm in Ma. and average home price here is $550k
OR, you could move outside of the US, work online in a developing country, and cut your costs by over 60% if not more. You can live like a king in Vietnam on $800/mo for expenses (that covers everything). I feel bad for Americans that don't have this option. Always making sacrifices, paying way too much ... and for what?
Government regulations and excessive taxation are the biggest problem.
Right up there with government’s refusal to outlaw ownership of single family homes purely for investment purposes and not introducing a rent-to-own program for those potential buyers only stopped by lack of down payment amounts.
I was fortunate to buy in the summer of 2020 before housing prices spiked and after the interest rates were almost at the peak low - nothing but complete dumb luck. I have a lot of sympathy for those that are struggling with finding affordable housing, especially those late 20s and early 30s age
That's not really luck, prices were inflated already because everybody and their mom was in the market for the low interest rates. The best time to buy was 2010-2012ish.
@donaldbiden9492 considering I was 17 in 2010, I'm going to count my blessings I got in the housing market before the 40% increase in 2021
@@USCarolinafan13 fair enough
Due to redlining and VA benefits and other programs, gov't practically gave away housing to millions of white American families. As a result... in at least half of States, 38% to 53% of homeowners have no mortgage. The concept of unaffordable housing has to be balanced with the reality that 'tons' of people only have to afford property taxes and utilities. If from a historically disadvantaged American family and didn't inherit any real estate, In the nation's capital, just as an example, there are plenty of bedroom bathroom suites on bus stops (no car needed) for under $200k in a shared house (buy with family, spouse, and/or tenants in commons). Meanwhile, the average job at the largest employer pays $130k - so can easily payoff in a couple years if desired. None of these programs have closed the racial wealth gap - if anything, it's widened since 1965/64. But homelessness is a choice for 98% of people. The 2% who really can't afford housing despite full efforts to secure gainful employment desire our consideration - policy, charity, and everything else.
Have u seen the used market lately on 2 or 3 yr cars.
I don't see a 40% drop.
All I see is a $50 dollar difference payment from a new ride.
Get the new ride, keep it at least 10yrs or more.
Stop trading every 3 to 5 yrs.
Keep your ride at least twice the length of the loan so you get your money back plus more
thank you so ooo much... I heard about the 28/36 rule. But how does this work if you are debt free. Is above the 28 allowed?
Theoretically yes - but you would still want to least room for down the road if you took on a bit of debt, like a new car. But also I’m more inclined to say that I’d stay very conservative with my house, even if otherwise debt free. Why over burden yourself with debt!??
@@ErinTalksMoneyunderstood
Does the 28% include utilities ?
Oh my parents live in Rhode Island.
Would you ever do a RUclips subscriber meet up?
I can run a poll and see if any others would be interested!
I’m way overextended with my housing, but that’s okay. I don’t buy very much. And the drunk driver hitting me cost me a lot. It cost more than just money, but also a lot of that, as well. Smh. Don’t drive drunk.
And having a roommate to cover those housing costs helps!!
if companies have to pay people more money then they have to raise there prices witch means people have to pay more for what they need or want
Beware of banks bearing gifts (toasters) which you’ll need to pay taxes on……
We're in a bubble now. I'm in a middle class area outside of NYC (despite popular belief, most of NY and NJ outside a few rich areas was middle class and affordable, though more expensive than other places, until 2 years ago). I make $130K but can't really afford a car, rent, or house. thank God I am rent stabilized. Even dumps near crack houses shot up from $1800 to $3000 rent. Mortgages went up to $5000 including taxes for places where the current residents make $60K or $70K. This is pure bubble/speculation territory. Businesses and home sellers only want to deal with the dual six figure income couples and there is a limited supply. my parents can't downsize because all "senior" places are prices the same as a mansion. It's actually pathetic. I was never a left wing communist type but I do agree with them that greed has officially gone too far. People online have said "move" but we're running out of places to move to. Should the entire country move to Tulsa, OK?
I just hate the inconvenience and unsafe factor of having a used car… when you pay for a newer car you have less maintenance.. how does this really shake out? Is there a point where ditching a used car for something better is better because maintenance becomes so high?? I’d love to hear you break it down. Thanks for your videos!!
Amy, that was my thought process when I last purchased a car. Buying a used car might be the wise choice but it depends on WHICH used car you buy. After researching this for about a half a year I found that buying a low mileage "common" car that was two or three years old was the sweet spot. Not just any common car though...one that has a long history of reliability which can be researched. You can also still add a warranty too. True, new cars don't need brakes and tires replaced anytime soon but the cost of brakes and tires versus the cost of the same car brand new makes buying a used car an enticing proposition....so long as it's not a fancy car. Fancy cars come with fancy repair costs.
I’m certainly not says that used is always best. 15 years ago I bought my car brand new. And 15 years later I still love that car - great purchase. If you have your heart set on a new car, go for it, just make sure it fits in the budget.
Thank being said, nowadays I’d be far more likely to consider a certified pre-owed. 21 year old me wasn’t willing to. (Not that I ever want to stop driving my car!) I think a car that is 2 - 3 years old would likely still require very little maintenance.
I’ll have to see what data I can find - perhaps there’s a video in that!
There is definitely a point where trying to keep an old car running is not financially responsible. I am sure there is something on the net that provides info on how to perform this cost-benefit analysis.
I’m almost 36 and have only owned 2 used cars. I bought a 2005 Honda Civic in 2010 and kept it until 2019, that summer I bought my current 2015 Toyota RAV4. I never purchased a warranty, I just find a mechanic that I trust and do regular maintenance. I’ve had zero issues and have saved ooodles of cash compared to most people I know. The sweet spot is 2-4 years old, in a reliable make and model. All this being said with the caveat of the current climate being a bit of anomaly, due the high cost of used vehicles.
I costed the warranty on the RAV4 and felt I was much better off just saving that money and using it if there was a big repair that came up. It actually added up a significant amount of money and I told the salesmen that it was a lose lose; either I don’t get my money’s worth from what a paid into the warranty, or I do, in which case they sold me a lemon 🙃
Curious....what are your thoughts on annuities as part of a persons retirement portfolio?
I will do a video 😂 I have mixed emotions.
@@ErinTalksMoney hahaha...thanks!
Texas is much more affordable than say New York or California. We bought our home in 2015 at a 3.5 % rate for a 2100 sq ft home for 195k. It’s now worth 350k
Key word is “Budget”. Most Americans don’t have one or even know what the word means. They live off of financing and credit cards for a lifestyle they cannot afford.
You have not looked at used cars they are up 40 percent and not worth buying right now. New cars are up about 12 percent. Do a few searches for used Honda and Toyota cars. Many with a lot of miles are selling at full new price. The chip shortage is still happening right now.
all of my relatives make 150, 200, 250k and up. I'm the only one that makes less than 6 figures..I feel like the family failure lol
Its not about how much you make. Its about how much you save.
No Home Costs only Soft drinks and a Radio
Wouldn't it be nice if first home buyers and renters paid less income tax and incremental increase in tax brackets on the more properties one owns... At the end of the day that is why everyone works so why isn't the system taxing accordingly...
Hmmmm how about cash and now 15 years old for a car. And the wheel fell off last year, so grand total cost is 6200
Cash for a car is a great option!
I can't afford a home and a car, but I can make my car a home.
I have a full time job that pays above average but i live home with my mother now at the age of 31, just cannot afford to even rent, because of huge rises in energy prices you get that on top plus the other stuff, forget about ownership, don't afford a car either so i'm stuck with a bike, if only the boomers had it remotely as rough as the younger generations...Oh and another thing i want to mention is, i have no children, no debt either, i have no idea why people would fabricate children into this world, how are they going to pay for it?
My car costs me 655$ a month. I makes 2800$ a month after taxes lol.
Holy heck that's depressing
I don’t see the point in the percent ratio everyone is driving around 100k cars and they make like 50k a year
Watching these kind of videos makes me happy that I chose not to live a "normal" life. I chose to be weird (Dave Ramsey's phrase.) I just paid off my mortgage 3 days ago, now 100% debt free. I'm 38, no kids, and make around 80k/year. Next step is to max out my retirement accounts while still living a good quality life. Now I just need to find a woman... hopefully that doesn't have a ton of debt lol.
Congrats!!!
Pretend broke if u want to find a women or make sure she similar in your lifetime of savings
By finding a woman you put at risk ALL you have worked for so hard you lDl0T.... go MGTOW....
most realtors don't have your best interest at heart. They are the ones that artificially inflated the housing market
@@youknowkbbaby people use them because they have access to MLS system which lists all homes for sale before it hits zillow or homesnap. so in reality we need only the good actors not the corrupt ones
Broke people who by a house become more broke
Taxes insurance maintenance
Possibly just as much as the mortgage
1500 rent does not equal 1500 mortgage payment
If a person takes out long term loans on houses and cars it will put you in the poor house because of all of the interest you have to pay to the bank.
Watching from Skagway Alaska, on a cruise. My first mortgage interest rate was over 18%. No tears from me people complaining at 7%. I did just fine. I also living alone most of my life (less 4 years being married). If I did so can others. Just live within your means and don't try and keep up with the Jones'
Okay Boomer
@@Madamchief actually, according to most generation classifications I’m not a boomer. So one should never assume Jamie
@@joethecomputerguy1 you don't hafta be old to have a boomer attitude like "well I suffered and survived..."
@@Madamchief Nah, it's much better to feel like you deserve everything while not having to work for it. Too many people these days just think everything should come to them on a silver platter and not have to work HARD for things. It's life. Work hard and you WILL get a head. But nah, everyone gets a trophy makes everyone "feel" good so we should do it. Ciao Jamie. Best of luck to you in this thing we call life.
Want a cookie joe?
Again, I beg for clarity. This shouldn't be a struggle... You state for the 28/36 rule: "ensure that all total debts don't exceed 36% of gross income". Surely you mean total monthly debt payments don't exceed 36% of total (average) monthly paycheck? The two are not equivalent, and hopefully the difference isn't lost on you. Otherwise, what, a $100K remaining mortgage debt would only be acceptable if one was making around $300K gross a year? Or, if buying a new home, you need to earn almost 3 times as much money per year as the loan you are taking on it? Never have I heard of such bizarre rule in my life.
Otherwise, good choice of content, and your transparency on dwelling choice is commendable.
@@micker9830 I am not at all saying what you state that I'm saying. "should" was never a word I used. I was letting the poster know how bizarre the statement sounds without the clarification. She clearly took it into advisement and added it to the later edit of her video. Problem solved, galactic crisis averted. 🙄
Erin, we would make such a cute couple❤
Great video and discussion. I bought my first home (condo) in my mid 20s when interest rates were much higher than today's rates. My 30 year mortgage was 11%. Purchasing a new car was out of the question. I previously paid cash for a very used car. Priorities! Homes generally appreciate. Cars depreciate. I kept that condo for 5 years. And it appreciated by 50%.
Lol. Yea ok 28 36.
You can bring home $4,000 and get a great house
One word: Roommates!
It's not ideal, but if you have a decent job and can have one other person (or maybe two) in the house with you, then having roommates would be a great way to help pay the mortgage. You just want to make sure that you buy the median home in a location where finding roommates is easy. Just understand that unless you are truly in love with the house, the real goal is building equity so you can use it to buy the house that you'd prefer in the location that you prefer.
Agree. It’s how I started and you are not home a lot anyway. Just make the room rent cheaper than 1 bdrm apt.
First off young people need to do what my wife and I did. Get a fixer upper.
Hey!! I know how we can fix this! Lets give ANOTHER few tax cuts to the very rich, pay the working class AS LITTLE as possible and include Home Owner Associations to make things extra stressful!!! Maybe an alternate idea is to buy a cheap van and LIVE IN IT!!! Land of the free - if you can afford it.
Buy used
Median means that half of the houses in the U.S. are below that price, and half are above that price. Also, real estate is local. Where I live, you can buy a house in a decent area of town for $100,000. Increasing your income, increasing your down payment, buying a more modest house, and buying a house that needs cosmetic repairs are just a few ways to increase affordability.
in my area homes that were 250k went up to 500k and the interest rates tripled on top of that. So while it is area specific, many areas are specifically fucked .
I am trying to purchase my second house so that I can rent out my current house since I paid it off in 2020. It hasn't been easy with one single income, but if you sacrifice enough, 😊 it's definitely possible.