FranLab is getting evicted

[james_s]

Thinking of worst case examples like that and thinking it essentially "futile" to save is crazy. You can want changes in the system all you want, but ultimately you have to live in the world you have (or move to somewhere more favourable).
Live within your means, save, have contingencies like multiple sources of incomes (or the potential for them), and be willing to pivot if circumstances change.

That's not really what I meant. Saving money and having an emergency fund is absolutely a wise idea, I only meant that it is not a substitute for health insurance, even a modest procedure can easily wipe out a savings account if you are not insured.

Obviously also there is no perfect place to live, everywhere has advantages and disadvantages, but I am still annoyed that the country I live in gets so many things right and then totally drops the ball with this. If we had a functional national health insurance system that would take care of the only really major gripe I have, everything else I can deal with. Unfortunately the only people really willing to fix the healthcare situation are also totally nuts, and I know from experience that if they do ever have the chance to revamp the system they will find a way to screw it up horribly instead of copying what works from elsewhere.

[EEVblog]

Thinking of worst case examples like that and thinking it essentially "futile" to save is crazy. You can want changes in the system all you want, but ultimately you have to live in the world you have (or move to somewhere more favourable).
Live within your means, save, have contingencies like multiple sources of incomes (or the potential for them), and be willing to pivot if circumstances change.

That's not really what I meant. Saving money and having an emergency fund is absolutely a wise idea, I only meant that it is not a substitute for health insurance, even a modest procedure can easily wipe out a savings account if you are not insured.

Totally, especially if you are in a country like the US that has no universal health care.

As I mentioned, we choose to have private health insurance "just in case" of long term issues. Here it's called "basic private hospital cover", and I'd recommend everyone have that as a minimum.
It actually used to be really cheap here, like 50/month or something and it was actually cheaper than paying the medicare levy for not having any basic private cover.
So pretty much only but the really poor here wouldn't have basic private cover.

Almost 5M aussies have private health, but even then the majority would just go to a public hospital and get free care if something goes wrong.
https://www.apra.gov.au/sites/default/files/2022-11/Quarterly%20private%20health%20insurance%20statistics%20Highlights%20September%202022.pdf

Ironically private health insurance doesn't help us if we chose to go to the emergency department at the local private hospital. We've been there several times with the kids breaking things and we pay a real preimum for that instead of going to the public hospital and waiting and getting the work experience surgeon. So that cost comes out of our savings.
If we had an issue that put us in the hospital for weeks or months then that's when the private cover really kicks in.

[blacksheeplogic]

We need insurance insurance.  Insurance against insurance companies that tell you they'll cover everything and then cover nothing.

It's called savings. Smart people put aside some cash each month to go toward emergency expenses like health. Have a different bank account if you need the discipline of not touching it.

My bill was US$750K and follow up care (monthly) was US$1.5K.

[tom66]

What a lot of people don't realize is that in the US you can go to any ER (A&E) get treatment and ignore the bill. Wash rinse & repeat. A lot if illegals and poor folks use this method.

I thought that was only true for life sustaining care.  So if you get dragged into the hospital in cardiac arrest they'll try to get you going again.  But if you need a heart transplant to live a normal life after that, good luck with that.

Given cancer is one of the biggest killers in most of the western world that's one thing I'd really want a hospital to deal with.   I doubt chemo is included in 'free emergency care'. 

[tom66]

That's not really what I meant. Saving money and having an emergency fund is absolutely a wise idea, I only meant that it is not a substitute for health insurance, even a modest procedure can easily wipe out a savings account if you are not insured.

Obviously also there is no perfect place to live, everywhere has advantages and disadvantages, but I am still annoyed that the country I live in gets so many things right and then totally drops the ball with this. If we had a functional national health insurance system that would take care of the only really major gripe I have, everything else I can deal with. Unfortunately the only people really willing to fix the healthcare situation are also totally nuts, and I know from experience that if they do ever have the chance to revamp the system they will find a way to screw it up horribly instead of copying what works from elsewhere.

Something that the more liberal wing of politicians neglect to mention is that people tend to spend as much money on rent or housing as they are comfortable spending.  So for instance they might spend up to 40-50% of their take home on rent to live in a good area.  So the politicians go, "We need better wages and lower rent!"  Well you can't have both, because rents will track wages,  as will house prices,  if you pay say $30 an hour to work in a Starbucks then all of the apartments nearby will be more expensive.  And neither can you impose a restriction on rents because you haven't solved the fundamental problem of excessive demand, now you've just created a waiting list for housing.

And no politician wants to go and say, "Well maybe you shouldn't rent that $1,500 apartment but get that $900 one in that sketchy area" because their constituent is above thinking they are anything other than one to live in the nice part of town, with all the nice shops and parks that they want to live near.

Perhaps the only way to deal this is to literally enshrine in law "you can only spend 33% of your take home on rent" - that would limit rental inflation but create all sorts of headaches for housemates living together, people with erratic income or the self employed, and there would no doubt still be corruption.

Longer term better public transport makes cities more livable so the practical area of a commute becomes larger, as well as arrangements like working from home for jobs that can accommodate that.

[james_s]

And no politician wants to go and say, "Well maybe you shouldn't rent that $1,500 apartment but get that $900 one in that sketchy area" because their constituent is above thinking they are anything other than one to live in the nice part of town, with all the nice shops and parks that they want to live near.

Perhaps the only way to deal this is to literally enshrine in law "you can only spend 33% of your take home on rent" - that would limit rental inflation but create all sorts of headaches for housemates living together, people with erratic income or the self employed, and there would no doubt still be corruption.

Longer term better public transport makes cities more livable so the practical area of a commute becomes larger, as well as arrangements like working from home for jobs that can accommodate that.

Rent is for suckers. I saved every penny I could and bought a house when I was 25, it was a LOT more than 33% of my income at the time but it was the best decision I ever made, if I hadn't done that I'd have to have moved off into the boonies a long time ago. I cannot even fathom why someone would be content to rent any longer than they had to. It is absolutely moronic from a financial standpoint. When you buy you can eventually have it paid off which I intend to do in a year or so, then I'll own my house free and clear and no more payments, only taxes.

I do hope working from home remains common, it would allow me to move out into a rural area where I can have 10-15 acres all to myself. I would love to never have to set foot in a city again, I struggle to understand how some people can even exist in such a crowded hellscape. Urban environments are horrible, it's stressful just thinking about the crowds and the claustrophobic tall buildings.

[tautech]

Even if you are freehold a larger property is like taking on debt again due to the ongoing upkeep it requires. Those urban and/or renting never see the other side of larger property ownership.

[tom66]

And no politician wants to go and say, "Well maybe you shouldn't rent that $1,500 apartment but get that $900 one in that sketchy area" because their constituent is above thinking they are anything other than one to live in the nice part of town, with all the nice shops and parks that they want to live near.

Perhaps the only way to deal this is to literally enshrine in law "you can only spend 33% of your take home on rent" - that would limit rental inflation but create all sorts of headaches for housemates living together, people with erratic income or the self employed, and there would no doubt still be corruption.

Longer term better public transport makes cities more livable so the practical area of a commute becomes larger, as well as arrangements like working from home for jobs that can accommodate that.

Rent is for suckers. I saved every penny I could and bought a house when I was 25, it was a LOT more than 33% of my income at the time but it was the best decision I ever made, if I hadn't done that I'd have to have moved off into the boonies a long time ago. I cannot even fathom why someone would be content to rent any longer than they had to. It is absolutely moronic from a financial standpoint. When you buy you can eventually have it paid off which I intend to do in a year or so, then I'll own my house free and clear and no more payments, only taxes.

Well the problem is that the cheapest home you can buy anywhere in the south of England for instance would be around £200,000.  That is, in terms of a house that you could live in.  It would not be big and would probably be in a rough area, but it's a place to live.

To buy that you would need a min. downpayment of £10,000 (if you have excellent credit score to get a 95% mortgage) plus around another £5,000 for solicitors and other costs.  So say £15k plus you really should have an emergency fund on top of that. And you need an income of at least £44k at the maximum loan to salary ratio of 4.5x, but most banks like 4x, so assume £50k (~$60k). 

So the 'cheap' house now requires a salary almost twice as high as the median income in this country (~£33k).  A job a lot of people cannot expect to achieve as it requires skills they don't have and probably never will.  The ironic thing is, the mortgage over 30 years would probably cost about the same as the rent, but it's not available without meeting the downpayment or loan to salary calculations.  You can add cash to the purchase of the house, which is how a lot of people on lower incomes buy homes (usually inherited or given to them by parents) but if you're not lucky enough to have that, tough.

People get trapped renting. It's very easy to end up in this situation.   I'm sure similar calculations apply for the US.  Just think about an example $20/hour worker and think what kind of home they could buy on that wage, even if they were very frugal.  OK, engineers on top salaries are doing fine but a society is going to struggle when some of the most essential workers are struggling to pay the rent and have nowhere to call home.

[EEVblog]

Even if you are freehold a larger property is like taking on debt again due to the ongoing upkeep it requires. Those urban and/or renting never see the other side of larger property ownership.

A "large" property can be as little as a 1/4 acre block (1000sqm), enough for a house and a big arse workshop, even 2000qsft that Fran needs.

[EEVblog]

Rent is for suckers.

It lost me maybe $400k
Or more correctly, the decision not to buy a bigger place cost me $400k.


Seemed like a good idea at the time.

[EEVblog]

Perhaps the only way to deal this is to literally enshrine in law "you can only spend 33% of your take home on rent" - that would limit rental inflation but create all sorts of headaches for housemates living together, people with erratic income or the self employed, and there would no doubt still be corruption.

Ultimately though everyone needs to be personally responsible for making sensible life choices based on their own circumstances.
I want punch the TV every time I hear someone say they can't afford a house in Sydney because the median price is X. Well, be realistic and buy below the median 
Not everyone can live next to their favourite cafe.

Longer term better public transport makes cities more livable so the practical area of a commute becomes larger, as well as arrangements like working from home for jobs that can accommodate that.

Bringing it back to Fran, this seems like a no-brainer. Live <1hr commute from San Fran so you can go in every weekend and enjoy the lifestyle. Don't let fear or desire drive your realistic fiscally responsible choice.

[EEVblog]

Rent is for suckers. I saved every penny I could and bought a house when I was 25, it was a LOT more than 33% of my income at the time but it was the best decision I ever made, if I hadn't done that I'd have to have moved off into the boonies a long time ago. I cannot even fathom why someone would be content to rent any longer than they had to. It is absolutely moronic from a financial standpoint.

But it's the easy thing to do. Serious saving requires discipline, sacrifice, and long term thinking. It's just so easy to spend X% of your wage on rent and a lifestyle. And you might save a little, but otherwise don't build up much. Next thing you know it's 10 years later and you are stuck because the housing market boomed.

In Fran's case it seems like the she wanted to buy a place at one point but ultimately gave up because of the difficulty getting a loan being self employed. That's when you really need to knuckle down and find a way, making radical lifestyle changes if needed.
I'm absolutely sure there could have been some way she could have turned that original $45k gofundme into a property of her own.

[james_s]

Well the problem is that the cheapest home you can buy anywhere in the south of England for instance would be around £200,000.  That is, in terms of a house that you could live in.  It would not be big and would probably be in a rough area, but it's a place to live.

To buy that you would need a min. downpayment of £10,000 (if you have excellent credit score to get a 95% mortgage) plus around another £5,000 for solicitors and other costs.  So say £15k plus you really should have an emergency fund on top of that. And you need an income of at least £44k at the maximum loan to salary ratio of 4.5x, but most banks like 4x, so assume £50k (~$60k). 

So the 'cheap' house now requires a salary almost twice as high as the median income in this country (~£33k).  A job a lot of people cannot expect to achieve as it requires skills they don't have and probably never will.  The ironic thing is, the mortgage over 30 years would probably cost about the same as the rent, but it's not available without meeting the downpayment or loan to salary calculations.  You can add cash to the purchase of the house, which is how a lot of people on lower incomes buy homes (usually inherited or given to them by parents) but if you're not lucky enough to have that, tough.

People get trapped renting. It's very easy to end up in this situation.   I'm sure similar calculations apply for the US.  Just think about an example $20/hour worker and think what kind of home they could buy on that wage, even if they were very frugal.  OK, engineers on top salaries are doing fine but a society is going to struggle when some of the most essential workers are struggling to pay the rent and have nowhere to call home.

That's a bargain compared to renting, any way you slice it, renting costs more in the long run, usually a LOT more and when you move out you have nothing. My house cost me ~90% of my income when I bought it, I had two roommates for several years to make ends meet. It is faulty logic to look at renting a place on one's own, get roommates, find a second job, do whatever it takes, it will be harder in the short term but much easier and better in the long term. The problem is that people want instant gratification, they have rigid requirements that they insist be met NOW, whereas I was always looking ~10 years out. I chose to sacrifice in my 20s so that I'd be comfortable in my 30s and beyond.

[james_s]

Even if you are freehold a larger property is like taking on debt again due to the ongoing upkeep it requires. Those urban and/or renting never see the other side of larger property ownership.

You don't have to do upkeep on the whole property. Loads of people have rural acreage and leave much of it to nature. I don't need a massive manicured lawn, a field and trees is fine with me.

[tom66]

That's a bargain compared to renting, any way you slice it, renting costs more in the long run, usually a LOT more and when you move out you have nothing. My house cost me ~90% of my income when I bought it, I had two roommates for several years to make ends meet. It is faulty logic to look at renting a place on one's own, get roommates, find a second job, do whatever it takes, it will be harder in the short term but much easier and better in the long term. The problem is that people want instant gratification, they have rigid requirements that they insist be met NOW, whereas I was always looking ~10 years out. I chose to sacrifice in my 20s so that I'd be comfortable in my 30s and beyond.

The problem is it doesn't matter how much you want it, if you have £1,000 a month rent and a £1,800 a month paycheque (after tax figure) -- which is very typical for an average earner in this country -- you are never going to be able to save up enough to qualify for a mortgage on anything remotely worth living in.

You basically end up racing the clock as your income needs to grow larger to qualify for a shorter term mortgage.  I know someone who managed to beat this and buy a house aged 45 after losing his first home to business failure but he had to put something like £60k down which isn't trivial at all.

I think it's very easy to say "just earn more" but if you have limited skills your earning potential is... limited.  Longer term this has other implications too, the rise of AI, self driving vehicles etc completely changes the job market for many.

[james_s]

The problem is it doesn't matter how much you want it, if you have £1,000 a month rent and a £1,800 a month paycheque (after tax figure) -- which is very typical for an average earner in this country -- you are never going to be able to save up enough to qualify for a mortgage on any remotely worth living in.

Get a roommate, get two roommates, get 5 roommates, rent out the whole house and couch surf, live with your parents, live in the garage, or live in a tent in the back yard if you have to. There are solutions to this, it is doable. I took in two roommates, I bought a bread machine at a thrift store and lived for a couple years mostly off of tuna sandwiches on basic white bread I made in the bread machine and fruit that was in season and on sale. For several years I was budgeting under $5 a day on food. Obviously now those numbers are going to be higher, but not THAT much higher, I could eat comfortably on $10/day pretty easily.

If people spent as much effort on actually earning more or spending less as they do coming up with excuses for why they can't do it they wouldn't need the excuses.

[pcprogrammer]

... I could eat comfortably on $10/day pretty easily.

It is getting harder due to rising prices, but our weekly supermarket bill now varies between 70 - 100 euros for healthy foods including plenty of fruits and nuts (walnuts, almonds and cashew) which are expensive. We eat home cooked every day.

You can do cheaper if you buy crap food like potato chips, but that hurts your health in the long run.

Most important is to manage your money properly. Don't go and buy a Mercedes if you can't afford it. Or like the saying "champagne taste on a bear income" will ensure trouble.

[PlainName]

If people spent as much effort on actually earning more...

I think you are lacking empathy. Not everyone has your drive, your ambition, your goals, your ranking of hardships, your desires. And quite a few may even pretty close to your ideal but nevertheless be derailed by circumstances.

[tom66]

It's definitely easier to eat healthier when you have more time, though.  If your earnings only come in because you work long hours, live far away from where you work (consequentially having a long commute) and then add in the stress of doing all of this, then you easily get a vicious cycle where cheap crap food just makes some problems go away for a bit.

Of course personal responsibility is a factor (I think we've been there on other threads) but humans definitely aren't perfect and I can't blame people for not wanting to sacrifice everything to get the house.  Not that it should be easy, but someone working average hours (37hrs/week) at a median wage should be able to afford to buy a home, this was definitely possible 20-30 years ago, but it's rapidly becoming impossible across most of the western world.

[pcprogrammer]

It's definitely easier to eat healthier when you have more time, though.  If your earnings only come in because you work long hours, live far away from where you work (consequentially having a long commute) and then add in the stress of doing all of this, then you easily get a vicious cycle where cheap crap food just makes some problems go away for a bit.

Yes that is certainly true and I have been there myself, when I was young and starting out in the working world.

Of course personal responsibility is a factor (I think we've been there on other threads) but humans definitely aren't perfect and I can't blame people for not wanting to sacrifice everything to get the house.  Not that it should be easy, but someone working average hours (37hrs/week) at a median wage should be able to afford to buy a home, this was definitely possible 20-30 years ago, but it's rapidly becoming impossible across most of the western world.

As long as you are happy with choices made, it does not matter, renting or buying. One thing is for sure, when you own a house and you die, it is the ones you leave behind that benefit from it. You can't eat stones 

But with the increasing cost of everything, including houses, (even though they are stabilizing and maybe even declining again in the Netherlands) it might not bring you much if you sell and start renting for your last years on the planet.

It is true that the prices of houses have gone up way quicker then salaries, and that makes it harder for youngsters to step on the house owners ladder. But it is what lots of people my age benefited from, stepping up the ladder. We earned nicely on our first house, lost a bit on the second and are now in our third, with only cost of insurance, taxes and some upkeep.

Worked hard, made good decisions, and had some luck, and then I got ill. You never know what the future brings. 

[sokoloff]

If people spent as much effort on actually earning more...

I think you are lacking empathy. Not everyone has your drive, your ambition, your goals, your ranking of hardships, your desires. And quite a few may even pretty close to your ideal but nevertheless be derailed by circumstances.

Citing this view of reality might be lacking in empathy, but it doesn't make the view of reality incorrect.

If people are happy enough with their own drive, ambition, goals, ranking of hardships, and desires and the outcomes that those result in, there's no problem at all. I'm glad they're happy. If they're not happy, I'd urge them to change something.

[Quarlo Klobrigney]

Don't fall victim to the get rich quick scams either.
Do you remember the guy "I lived alone in a one bedroom apartment and sold tiny little classified ads in newspapers across the country and made millions of dollars!"
https://en.wikipedia.org/wiki/Don_Lapre

There are a lot of similarites here to certain people we know all ending in eventual disaster.
Go Fund Me, Patreon?
There is no such thing as "get rich quick".
There is only careful planning, work hard & save, inheritance, lawsuit, the former stock market, boy toy to Liberace, Phyllis Diller (insert the current undesirable's name here), bloated corpse house cleanup (and you're the new guy).

Listed in order of more careful planning to less^

[tautech]

Even if you are freehold a larger property is like taking on debt again due to the ongoing upkeep it requires. Those urban and/or renting never see the other side of larger property ownership.

You don't have to do upkeep on the whole property. Loads of people have rural acreage and leave much of it to nature. I don't need a massive manicured lawn, a field and trees is fine with me.

That might work for your climate however in those that have high spring growth and then dry off in summer an untended property becomes a huge fire risk to others nearby.
Here in NZ holdings over a Hectare or 2 require livestock to keep the grass under control which require tending to, fences to retain them and handling/trucking facilities.
It's not unusual for some to relocate into a rural paradise only to retreat to a urban environment after getting a taste of the work a rural property requires.

[tom66]

Citing this view of reality might be lacking in empathy, but it doesn't make the view of reality incorrect.

If people are happy enough with their own drive, ambition, goals, ranking of hardships, and desires and the outcomes that those result in, there's no problem at all. I'm glad they're happy. If they're not happy, I'd urge them to change something.

Perhaps the reality of the situation can be accepted whilst also not accepting it as something unchangeable?  It is certainly possible to make society fairer.

[Kasper]

Things are getting harder.  Central bankers and economists keep telling people to limit raises and warning about a wage price spiral even though we are far from it with wages not even keeping up with inflation.  They make it sound like we'll have a catastrophy if workers don't get a relative pay cut every year.

On the other hand we've got people demanding a house, family and pets near the beach in the few areas that cost much more than everywhere else.  They want it on 1 income from a job that takes 1 day to learn.  It's like joy riding in a hummer, while demanding the taxpayers subsidise the cost of gas because it's unfair how much they choose to spend on gas. 

They could move to a more affordable area.
They won't only solve their problem, they'll also help others in similar situations by reducing the demand where there is excess demand.

They don't want to help others though, they won't even help themselves, they want the taxpayers to fix it.  If taxpayers don't like that, it's up to them to push back, to help people see there are other options.  Even if it means getting accussed of lacking empathy.