40-year-old homeowner says economy doesn’t add up: ‘I’m making the most money I’ve ever made, and I’m still living paycheck to paycheck’
40-year-old homeowner says economy doesn’t add up: ‘I’m making the most money I’ve ever made, and I’m still living paycheck to paycheck’
'I’m making the most money I've ever made, and I’m still living paycheck to paycheck'
“There's this wild disconnect between what people are experiencing and what economists are experiencing,” says Nikki Cimino, a recruiter in Denver.
You're viewing a single thread.
"I just made the most expensive purchase of my life and I can't figure out why I am living paycheck to paycheck."
Why would buying a house have you living cheque to cheque? Do you think you buy something on credit and then all your income gets taken until it's paid back? I'm genuinely confused about what you're trying to say, here.
Also, it's not like she's paying for her mortgage in addition to whatever she was doing previously (presumably rent). The mortgage payment replaces your rent payment.
She's paying like 17-18% on credit card debt that she didn't pay off because she saved a down payment. This is just financial illiteracy
True but there is also the added expense of maintaining the property and having a rainy day fund for emergencies related to homeownership.
There's also taxes in addition to that. Which can cost the same as rent.
Taxes are usually included when people say how much their mortgages is per month because most people pay their property taxes through an escrow account attached to it
True, though home property taxes can grow surprisingly quickly and catch people off guard.
It kind of does, though. She look out a mortgage and those have a monthly cost.
What OP is probably saying is that if you have a certain income level and then you choose to take on a debt that you're going to have trouble paying back, that's mistake that you made and should have seen coming. This wasn't an unforseen medical bill, the person in the article could have chosen to buy a cheaper condo or rented until rates were more favorable.
She also really should have finished paying off that CC debt and delayed the down payment; that's just a killer and is almost certainly at 3 or 4 times the interest rate of her mortgage, which incidentally could have been a bit lower if her debt-to-income ratio were better. Shit sucks, but somebody who's doing okay and fucks it up gets less sympathy from me than people who would do anything to be living paycheck to paycheck with a steady income and home ownership.
Also gotta love how many of these people remember Trump fondly because he was president WHILE THE GOVERNMENT WAS CUTTING THEM CHECKS! That's absolutely not gonna be his plan in round two.
What OP is probably saying is that if you have a certain income level and then you choose to take on a debt that you’re going to have trouble paying back, that’s mistake that you made and should have seen coming
If that's what they'd said, I wouldn't take issue with it. Of course a person has to do the maths, buying a home isn't a light decision. But the size of the purchase isn't at all related to living cheque to cheque, which was in the words they chose.
Yes it is. Higher home cost = higher monthly payment. Why would it not be related?
Because the purchase is broken up into installments and paid back monthly. That is why, despite my home being the most expensive thing I have ever purchased, I am not living cheque to cheque. If her problem were the size of the purchase alone, then I too would be living cheque to cheque and so would all other homeowners with mortgages.
Edit: I should point out that my cost of living has actually dropped since I bought my home, because I did the maths to be sure it would. Most expensive purchase of my life saved me money. Go figure, right?
What the fuck is this hair splitting pedantry
Probably because she bought more house than she could afford, and prioritized that over paying off get credit cards.
Right, so then, her issue wasn't the size of the purchase, is that she didn't do the maths beforehand to make sure it was a good idea.
So why are you trying to insist that the problem is the amount of money spent, rather than this lady not doing the maths?
I don't understand the difference. It sounds like two ways of saying the same thing.
I'm sorry you can't tell the difference, let me try again with a question: Does everyone who "makes the most expensive purchase of their life" end up living cheque to cheque because of that purchase?
No.
Why not, if the size of the purchase is the dominant factor in the equation? Which, remember, is quite literally what the OP here said: https://lemmy.world/comment/8540177
“I just made the most expensive purchase of my life and I can’t figure out why I am living paycheck to paycheck.”
So I ask again: why are you trying to insist that the problem is the amount of money spent, rather than this lady not doing the maths? Surely it makes sense that the not doing the maths is the problem here?
What do you call it when you are both splitting hairs and beating a dead horse? Splitting a dead horse?
She made an expensive purchase. She is now paying more money for it. This causes her to have less money. This causes her to be paycheck to paycheck. What exactly are you disputing here?
If she decided to purchase name brand canned green beans, and it ended up costing twice as much as generic, that was also her "not doing the math". But it would not harm her finances to a noticeable degree.
Saying the the size of a purchase has no bearing on its effect on your budget is so ridiculous I can't believe I'm entertaining this discussion at all.
As a matter of fact, if your next response isn't something vaguely worth taking about, I'm done with this whole...whatever this is.
It's the fact that she can't figure it out that's her problem, not the fact that she bought something big. She could have done the same with beanie babies at $20 a pop and run up a hundred thousand in debt over the course of two, three, four years, whatever. She'd be in the same situation, but without a house. The problem is not the purchase, it's that she's bad with money, jesus fuck it's like nobody on this fucking website understands how logic works.
Tell you what, I'm gonna block you now because you're giving me brain cancer with all this exposure to your idiocy, so don't worry about responding; I won't see it.
There's not much of a difference when the size of the purchase determines "the maths" of the monthly payment.
I did the maths before I purchased my home. The maths should inform the size of the purchase, not the other way around. I don't get why you lot insist the problem is just how much she bought, rather than the fact that she didn't do the maths.
We insist because "the monthly payment" is directly proportional to the purchase price of the home. You're the one who seems to think the monthly payment is somehow completely independent of the price.
I am not saying that at all. I'm saying that "the largest purchase of my life" is not the reason for living cheque to cheque. It's bad budgeting.
As an analogy, you're insisting the fall is what kills someone, and I'm insisting it's the sudden stop at the end. Because it is the sudden stop at the end. If just falling killed people, that Red Bull guy woulda died. If just making a large purchase put people in poverty, I would be too.
If I borrow a half million from the bank, I have to pay it back in monthly installments, commonly known as a mortage. Those costs are now added to your regular expenses.
Most rents are cheaper than mortages. So taking on a giant purchase + the cost of the mortage is a huge financial cost. Yes, she gets an asset (which she could sell at any point) but it's going to be more expensive.
A quick look at Denver apartments for rent confirms this, a lot of 1 bedrooms available for between $400 and $500 cheaper a month.
Most rents are cheaper than mortgages
Laughs in Canadian
I'm an Ohioan and Zillow says my house would rent for about $600/mo more than my mortgage is (which includes property tax).
Most rents are cheaper than mortages.
Yeah because rental properties are often shitholes and it skews the numbers
For the same exact property, rent is absolutely more expensive than a mortgage. Rent is usually paying for someone's mortgage for them, why would they make it lower? Who are these generous landlords?
Yeah because rental properties are often shitholes and it skews the numbers
Sure but my point is that this lady has made an extremely expensive purchase and now continues to pay for it.
Most rents are cheaper than mortages.
Yeah because rental properties are often shitholes and it skews the numbers
Rent is usually paying for someone's mortgage for them, why would they make it lower? Who are these generous landlords?
Ahhh, there's the misunderstanding. Local/single owner rentals are actually a small proportion of tenancies. Most are large organizations which have purchased a large building etc. It's actually a kind of fascinating issue but worth reading about!
You are surprisingly comfortable condescending to people when you're incredibly wrong and clearly have no idea how any of this works.
- A mortgage doesn't get added to your expenses, a mortgage replaces some of them. Specifically, it replaces rent, most peoples' largest expense;
- Mortgage payments repay some interest and the rest goes straight into equity;
- If your home gains market value, you don't pay more mortgage, but you do get more equity;
- A fixed rate mortgage means your housing costs stay the same for the term of the mortgage.
Seriously, if you're in the US you can get a fixed rate mortgage for a term of 30 years. There's literally no way to lose that one. Rates go up? Haha fuck my bank I pay the same mortgage. Rates go down? Haha fuck my bank I refinance so now I pay less even if rates go back up again.
Buying property as soon as I was able was one of the best decisions I've ever made, and I was not able to buy it particularly early. My head hurts a little bit whenever I think about how much money I've burned on rent in my life. And that phrasing is deliberate, I may as well have set the money on fucking fire for all the future good it bought me.
Edit: By the way:
Yes, she gets an asset (which she could sell at any point) but it’s going to be more expensive.
It's going to be more expensive than what? Renting it? If someone rents something, they don't get an asset. You only get assets when you buy them, because they have to be legally yours to call them an asset. So no, buying isn't a more expensive way to get the same asset. It's the only way to make it your asset.
To be fair, they don't actually own their house if they're paying a mortgage.
It wouldn't be any different if she was renting.
I'm not sure why they call her a homeowner when the bank actually owns her house.
In theory, over time you own more and more of a share of the house while the bank owns less and less. That's different from renting.
Still, if you literally can't afford the mortgage payments then it's still a bad deal.
They get to treat the property as if they own it from day one. Additions, changes...etc. lots of differences from renting.
The bank does not own her house. She owns her house. The bank holds a lien on it. Holding a lien on something is not the same as owning it.