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I live in Australia where I'm looking at 350,000 minimum for a house. My friend told me, and I quote, "yeah you'll pay about 60% of your pay to the mortgage but it's worth it". He also took out a ten grand home equity loan to fix his broken chimney. Australians are idiots when it comes to property.
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Nov 10, 2014 21:04
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I think a special personal finance course is kind of redundant and is always going to be ineffectual, no one is gonna pay attention in that poo poo. I certainly wouldn't. There already is a fine personal finance course in elementary school, it's called arithmetic.
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Nov 10, 2014 21:08
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EugeneJ posted:And the fact that you have to furnish the thing. And heat/cool/clean/maintain it. e;f,b.
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Nov 10, 2014 21:13
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Spermy Smurf posted:$200 electric bill monthly if using AC? Dude I would suck dick for $200 monthly for AC in the summer. My electric can be up to $400 in jun-aug for a 3br,2.5ba 80K 80's-mansion we're renting. Of course we're in Texas though. $400K would buy you a lot of mcmansion in Texas suburbs which even with a new HVAC system would cost a fortune to cool.
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Nov 10, 2014 21:13
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The problem with any sort of personal finance course in high school or earlier is that it has no relevant meaning to kids that age. They don't have any meaningful income, their parents provide most everything, they don't have to budget, and they just generally don't know the value of a dollar. They've just never had to worry about that stuff. And I don't mean that in a crotchety old man "kids these days" type of way, but I know when I was in high school all that poo poo was not even my radar. It's really hard to successfully teach something that most kids have no context for, and personal finance is kind of one of those things that you have to experience before you can really internalize it.
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Nov 10, 2014 21:14
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CelestialScribe posted:I live in Australia where I'm looking at 350,000 minimum for a house. He must have hosed up if he's paying 60% of his pay into the house, or he stretched his finances and the interest rates went up. In relation to the personal finance course. I did courses in economics and accounting at high school which taught me a lot. However the courses didn't inspire it was the economic environment of the mid 80s. There were merchant bankers and high flying business men making a lot of money at the time. They were my inspiration to learn about and run a business. I was only a child but a lot of adults were also inspired, of course this meant they put their money into the stock market bubble right before the 1987 stock market crash. Maybe kids would be more inspired for finance courses if you told them it's what the hedge fund managers used to get rich 
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Nov 10, 2014 21:20
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Devian666 posted:He must have hosed up if he's paying 60% of his pay into the house, or he stretched his finances and the interest rates went up. This is incredibly common in Australia and not seen as abnormal behavior at all. Property is religion here.
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Nov 10, 2014 21:22
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Pompous Rhombus posted:At the 6th grade center I went to, we had a one or two week project in our Gifted math class where we picked a job, researched the median income, then did a budget (the latter part especially relied on a fair bit of asking one's parents, this was also before everyone had a computer/internet at home) and wrote the whole thing up. It was pretty illuminating In 5th grade, we had a project where you were "given" a million dollars and had to show how you'd spend it, but you weren't allowed to invest it or buy a house. About all it taught us is that a million dollars may as well be infinite for everything a 5th grader would want. :/
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Nov 10, 2014 21:30
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CelestialScribe posted:This is incredibly common in Australia and not seen as abnormal behavior at all. Property is religion here. The same in NZ. I bought a house this year and I'm paying 35% of my official gross income. Although I'm not living in a large city with insane property prices.
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Nov 10, 2014 21:31
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P.D.B. Fishsticks posted:In 5th grade, we had a project where you were "given" a million dollars and had to show how you'd spend it, but you weren't allowed to invest it or buy a house. About all it taught us is that a million dollars may as well be infinite for everything a 5th grader would want. :/ Were you allowed to buy a jet?
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Nov 10, 2014 21:35
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Yeah I'm.regularly told to dump all of my savings and an emergency fund into a deposit because "you'll make your money back in a year or two!!" Servicing a mortgage on one income here is completely impossible.
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Nov 10, 2014 21:36
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P.D.B. Fishsticks posted:In 5th grade, we had a project where you were "given" a million dollars and had to show how you'd spend it, but you weren't allowed to invest it or buy a house. About all it taught us is that a million dollars may as well be infinite for everything a 5th grader would want. :/ This actually isn't a bad lesson to learn for kids. It shows that after a while, you sorta stop running out of things to buy, and often do you touch those shiny new toys anyway? Of course this is only effective if it's coupled with "this is why you save" IE "you're going to run out of things to want to buy if you only buy stuff, but investments can make you more money to leave you in a better place when you retire"
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Nov 10, 2014 21:42
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CelestialScribe posted:Yeah I'm.regularly told to dump all of my savings and an emergency fund into a deposit because "you'll make your money back in a year or two!!" Part of the problem is people are completely unwilling to even consider renting out a room or two as well because "they didn't buy a house to live with other people". Meanwhile we just put a deposit down on a $435k place over the weekend, let the fun begin! 
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Nov 10, 2014 21:49
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In my opinion: best thing is to learn how to calculate compound interest and run a table for a long time. Throw in penalty fees for credit cards on the spreadsheet and intelligent people understand just how dangerous credit cards are.
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Nov 10, 2014 21:56
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spog posted:In my opinion: best thing is to learn how to calculate compound interest and run a table for a long time. Ya, I'll give you one guess as to which one of those words demonstrates that this solution is unworkable as a social policy.
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Nov 10, 2014 22:13
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Rudager posted:Part of the problem is people are completely unwilling to even consider renting out a room or two as well because "they didn't buy a house to live with other people". A lot can be made from renting out a room. I considered it but I've converted one room into my office and the other is a server room. I get a tax write off for that but it's nowhere near the benefit of renting a room. Seems crazy if people are paying 60% of their income and they're denying themselves income.
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Nov 10, 2014 22:15
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My mother in law is VERY bad with money. She is in her mid-60's, has about $100,000 in retirement savings, maybe $20k in the bank, a paid off house (just recently took a bunch of money from her small company to pay off the mortgage during divorce proceedings), and has not contributed to Social Security. But hey, she bought a hot tub and had some skylights installed last year! She also just buys a lot of junk and blames other people as to why she doesn't have any savings. No, she is not planning on selling the house (in a decent part of California) and moving to a cheap cost of living area. We wish she was so reasonable. Re personal finance education: My parents insisted on me getting a part time job in high school (and I wanted to get one, so that worked out) to "teach me the value of money". I think it backfired though, because since I didn't really have any bills or household stuff to buy I could blow my whole tiny paycheck on whatever I wanted, which is not how the world works. There is just very little context to spending money as a teenager, even if your parents have you take over your cell phone bill or something like that. I was so bummed once I became an adult and had to spend money on rent and paper towels and other boring things.
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Nov 10, 2014 22:28
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I'm thinking that for my son, since he will turn 18 pretty early in his senior year, we'll have him live in an apartment by himself for his last semester of high school and basically just give him a monthly stipend and let him handle paying his bills. I think that might provide a good transition between living with the 'rents and adult life. Of course there's always the chance it'll backfire horribly.
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Nov 10, 2014 22:36
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Rudager posted:Part of the problem is people are completely unwilling to even consider renting out a room or two as well because "they didn't buy a house to live with other people". My question is: how the hell does anyone in Australia manage to save 20% deposit on one income? It goes beyond "take your lunch to work" territory.
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Nov 10, 2014 22:39
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Cicero posted:I'm thinking that for my son, since he will turn 18 pretty early in his senior year, we'll have him live in an apartment by himself for his last semester of high school and basically just give him a monthly stipend and let him handle paying his bills. I think that might provide a good transition between living with the 'rents and adult life.
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Nov 10, 2014 22:41
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Rudager posted:Part of the problem is people are completely unwilling to even consider renting out a room or two as well because "they didn't buy a house to live with other people". They have a point. If you're going to be renting out rooms, you probably would have been happier with an apartment. I would never buy a house if I had to rent out rooms to afford it. Of course, your options are more limited after you sign the mortgage papers and all.
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Nov 10, 2014 22:42
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CelestialScribe posted:My question is: how the hell does anyone in Australia manage to save 20% deposit on one income? It goes beyond "take your lunch to work" territory. Save 10% and pay LMI?
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Nov 10, 2014 22:51
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CelestialScribe posted:My question is: how the hell does anyone in Australia manage to save 20% deposit on one income? It goes beyond "take your lunch to work" territory. I managed to just fine. Maybe you could elaborate on salary vs expected house price. I don't know anyone who is paying 60% of their take home pay on their mortgage. I agree that housing in Australia is expensive, but not as extreme as you're making it out to be.
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Nov 10, 2014 23:01
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I make 4652 a month. Under 30% of my income would be a mortgage payment of no more than 1395. Impossible unless you live in a place with one bedroom (can't with a wife and kid) or live in the country, (stupid move), or have a deposit in the 150-200k range. I'm talking property of about 300k. Anything below that is either a one bedroom or fixer upper stuff. And I live 40kms out of the city. CelestialScribe fucked around with this message at 23:06 on Nov 10, 2014 |
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Nov 10, 2014 23:04
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fiery_valkyrie posted:I managed to just fine. Maybe you could elaborate on salary vs expected house price. There's way too many factors to make a statement like that, the place we're buying would be double the price is if was anywhere closer to Newcastle than what it is.
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Nov 10, 2014 23:07
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seacat posted:Dude I would suck dick for $200 monthly for AC in the summer. My electric can be up to $400 in jun-aug for a 3br,2.5ba 80K 80's-mansion we're renting. So what you're saying is that you will suck upwards of $200 of dick towards your AC bill? I don't know, that sounds pretty doable as far as goals go. Live the dream, seacat!
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Nov 10, 2014 23:25
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Sheesh, living in Texas is bad with money. I've had annual HVAC budgets in the $400 range. Don't need the "AC" part of HVAC in a temperate climate, and natural gas is cheap and efficient for the colder months.
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Nov 10, 2014 23:44
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Rudager posted:There's way too many factors to make a statement like that, the place we're buying would be double the price is if was anywhere closer to Newcastle than what it is. Yeah, but I feel the same about Celestial Scribe saying no one can afford a deposit and that you have to spend 60% of your pay on your mortgage. There are way too many factors to make statements like those as well. He's doing it tough and I have sympathy for that because buying real estate anywhere in Australia is a nightmare.
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Nov 10, 2014 23:59
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Certainly most people I know in their late 20s who are buying are doing so because mum and dad are helping them out. It's just so hard here and the social pressure is massive. Most people I know with mortgages are spending over 50% of their take home pay on repayments. CelestialScribe fucked around with this message at 00:13 on Nov 11, 2014 |
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Nov 11, 2014 00:03
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CelestialScribe posted:Certainly most people I know in their late 20s who are buying are doing so because mum and dad are helping them out. It's just so hard here and the social pressure is massive. Most don't do the math and realise they'd be better off renting and investing the excess to make a decent income. Or even save up a good deposit to reduce their potential mortgage payments.
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Nov 11, 2014 00:25
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CelestialScribe posted:Certainly most people I know in their late 20s who are buying are doing so because mum and dad are helping them out. It's just so hard here and the social pressure is massive. Who cares about the social pressure? That's why all your friends are spending so much on their mortgages. Because they're doing something they can't afford just because they think they have to. I bought my first place at 33 and it hasn't done me any harm. Keeping up with the Jones's is bad with money.
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Nov 11, 2014 00:48
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Oh totally. I shudder over what's going to happen when they have kiss, lose one income or run into some sort of trouble.
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Nov 11, 2014 00:51
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seacat posted:Dude I would suck dick for $200 monthly for AC in the summer. My electric can be up to $400 in jun-aug for a 3br,2.5ba 80K 80's-mansion we're renting. Couldn't you cover your roof with solar panels and still be well below the price of a similar size house in any state with a temperate climate? Or how about a geothermal heat pump?
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Nov 11, 2014 01:49
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fiery_valkyrie posted:Who cares about the social pressure? That's why all your friends are spending so much on their mortgages. Because they're doing something they can't afford just because they think they have to. I bought my first place at 33 and it hasn't done me any harm. The Jones' may be up to their eyeballs in debt, have a bunch of inherited money, or might make way more than you do. One of my wife's friends is doing real well. Nice cars, big house, boat, single income (with multiple kids), exotic vacations. I wondered what her husband does. Turns out he works for the family's bazillion dollar commercial insurance/real estate company, lives in a home owned by the family, the parents pay for the bimonthly fancy vacations. Good for him, but if I was trying to compare my lifestyle to theirs, I'd never keep up to that inherited money.
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Nov 11, 2014 03:06
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BadSamaritan posted:My mother in law is VERY bad with money. She is in her mid-60's, has about $100,000 in retirement savings, maybe $20k in the bank, a paid off house (just recently took a bunch of money from her small company to pay off the mortgage during divorce proceedings), and has not contributed to Social Security. But hey, she bought a hot tub and had some skylights installed last year! She also just buys a lot of junk and blames other people as to why she doesn't have any savings. The median net worth for people 65 years and older, in 2013, was $196,000. Your mother is ahead of the curve. And that scares the poo poo out of me. http://www.fa-mag.com/news/seniors--household-median-net-worth-drops-13-percent-14059.html
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Nov 11, 2014 03:26
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Cockmaster posted:Couldn't you cover your roof with solar panels and still be well below the price of a similar size house in any state with a temperate climate? Or how about a geothermal heat pump? Initial investment in either of these is ridiculously expensive.
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Nov 11, 2014 03:33
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CelestialScribe posted:Oh totally. I shudder over what's going to happen when they have kiss, lose one income or run into some sort of trouble. Their livelihoods hinge on the housing market, and an insurance adjuster's final decision. I could never figure out how they sleep at night. melon cat fucked around with this message at 03:50 on Nov 11, 2014 |
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Nov 11, 2014 03:40
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melon cat posted:Their livelihoods hinge on the housing market, and an insurance adjuster's final decision. I could never figure out how they sleep at night. Like Americans with sweet sweet freedom.  I will mention that I used to work retail and had a 45 year old coworker who pulled all her money out of a 401k because she feared another recession. She paid the taxes and spent the money(~7k) for a vacation. Afterwards she decided not to take part in the 401k because the recession was always coming.
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Nov 11, 2014 03:46
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Devian666 posted:Most don't do the math and realise they'd be better off renting and investing the excess to make a decent income. Or even save up a good deposit to reduce their potential mortgage payments. The math is more complicated than that, a sizable chunk of each mortgage payment (with an appropriate down payment) is principal that may be recouped upon sale of the home, while 100% of rent is lost forever. Basically if the total interest + homeowners insurance + property tax payments - appreciation of the purchase price is less than renting for an equivalent period, on a purely monetary basis, buying might be better. You then have to factor in the opportunity cost for investing the difference in mortgage payments vs. rent payments, as well as the ability to deduct interest payments from income taxes to increase net income. All of those variables, except for the interest and income tax deductions, are wildly unpredictable, so it's hard to say what's superior financially. Thinking that renting is strictly superior to buying is bad with money.
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Nov 11, 2014 04:56
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Cicero posted:I'm thinking that for my son, since he will turn 18 pretty early in his senior year, we'll have him live in an apartment by himself for his last semester of high school and basically just give him a monthly stipend and let him handle paying his bills. I think that might provide a good transition between living with the 'rents and adult life. My parents are idiots with money, so I've always tried to figure out how I became good with money. I had to actively ignore a lot of their advice. The best I can figure are two things: 1: I moved off campus as a college sophomore and started paying rent, utilities, food, gas, and all that jazz at 18. I worked very part time, so most of my money came from scholarships/loans, but I still saw the money come in and go out, and so I developed a rudimentary feel for the cost of things. I saw that my pittance of part time money paid for basically nothing. I learned how to do things cheaper. When you make $200 a month, spending $20 to eat out seems insane. Rotate ISP promos, cook my own food, shop for deals, and so on. 2: When I graduated and actually started working for real, I saw that while I made "good" money, after taxes, rent, bills (now including health care!), and any amount of retirement savings, there was very little left. I didn't really make $50k. After literally the cost of living, I was lucky to save $5k a year in retirement and $10k in cash, and that was living frugally. For better or worse, I also work with a lot of older people - my average coworker is about 50 - and I saw that most of them were still living basically check to check - while making double what I made. After about 1 whole year of work, which felt like an eternity, I realized how much work I'd put in for a whopping $10k in the bank, all while still owing $20k in student loans, and saw how long I'd have to be doing it - 30 years? 40 years? - and realized I had to find a better way. I can't imagine the existential dread I would have if I wasn't stacking money like crazy, and spending it on cars and adult toy bullshit instead. To not see a light at the end of the tunnel...I don't even want to think about it. I wouldn't feel like I had freedom.
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Nov 11, 2014 04:59
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