That’s like claiming some economists insist that no investment offers any real return over a long enough time. As evidence, ask someone who invested his life savings with Bernie Madoff 12 years ago.
First of all, it doesn’t support the claim that economists think houses don’t offer a real return over a long enough period of time. It supports the claim that some houses are over valued and poor investments.
Second, it’s an asinine and oblique way of making a point.
Third, 3 years is not “long term.”
And if you have that heart attack and survive? No worries, the govment will be there for you, I suppose… maybe.
Point taken (as I asserted 3 years over your long term statement). But, just because an economist hasn’t said that a long term home ownership can be bad, doesn’t make it so. There can be bad long term issues with long term home ownership, depending on the cherry picking of circumstances. Economists may be “professionals”, but they get it wrong too.
Agreed on the sustainable balance, you don’t want to deny yourself any fun. But at the same time, people should be realistic about the potential duration of that fun. If I bought a new Audi A8 (sweet car man), my enjoyment would last maybe a week, until I realized it’s just another shit box that will haul my ass to work, for you guessed it, to earn money to pay for the Audi. If I’m driving a shit box already, might as well be a used one (but not a beater), that I can repair, and use to haul my ass to work, for you guessed it, to earn money for other things I feel are more important and have more value to me. As for that A8, I would love to have that car. I can afford that car. Should I buy it? My gut says NO WAY. I’ll lose interest quickly and will have buyers remorse. I know that is what will happen. Sadly, most people don’t think about how they’ll feel after wards if they go through with a purchase like that. It’s all about the right now, and we’ll figure something out later.
Agreed, if you’re skimping on your car and your housing sucks (and you know it)… and you have the money to take care of those things, yeah, you need to fix that situation. But if you have no problem buying used cars and fixing them for many years, and have a place to live that you enjoy, why buy new or supposed “better” things if it makes no difference to you? If that’s the case, you might as well accumulate for a rainy day, or something more worthwhile to you later on. For instance, if I ever become an uncle someday, I will be helping out with 529’s in those cases. The new car pales in comparison to the value I’ll get out of doing something like that.
What it comes down to is making the best use of your resources. Something making $20k a year is in a much different situation than someone making $100k. Either one, though, can make choices that lead to a better situation down the road.
You need to pay for food, shelter, clothing, etc. - your immediate needs (not wants
You need an emergency fund of 3-6 months living expenses (for your need, not your wants or your luxuries)
You need to plan for the future.
Because (presumably) you’re human you also have a need for amusement of some sort - but that needn’t be hideously expensive, and you must make choices within your means (for example, I used to make enough money to fly airplanes as a hobby. Then my income was cut, so I can no longer afford that. I now indulge in much less expensive amusements).
How, exactly, all of the above will shake out varies enormously from person to person, but I’d say if you’ve got all of the above covered you have “enough” money, if it’s not all the money you want.
Er…that should have been SHOULDN’T put yourself in debt for the sweet car.
Coming from you, that seems like such a middle class sentiment. But you are childless…
The poor worry about how much money they will have tomorrow.
The middle class worry about how much money they will have when they retire.
The wealthy worry about how much money their great grandchildren will have for college.
I’ve moved on to “ideally, I’ll leave money to my children.” I really hope I don’t spend my last dollar when I die.
The fact that we are even discussing this topic at all means we are all in the middle classes. Wealthy people don’t worry about how much they should have.
That sort of misses my point anyway. I may have children at some point. I may want to buy a boat (probably not though). I may lose my job and need a big cushion. Who knows? You save money so you can have options. But you also want to enjoy yourself every now and again.
The problem is a lot of people want to have the affluent lifestyle first and assume at some point in the future they’ll figure out how to make the money.
It all comes down to choices. Wife and I both paid our way through law school and graduated with no debt. Upon graduation we both got jobs, lived off of one salary and banked the other. Within 6 months we had saved enough to put 20% on a modest home. When we moved in, the living room furniture included lawn chairs and a cable spool. We’ve never bought a car on time, and never caried a credit card balance.
OTOH, I have very clear memories of sitting in a college friend’s apartment, with about 20 folk I had gone to college with. When the subject of finances came up, my wife and I were the only ones who did not carry a monthly credit card balance.
But I think it is a lot easier for a married couple to save money, than a single person. While 2 cannot live as cheaply as 1, a couple can certainly live cheaper than 2 singles. But while in our 20s and early 30s, we definitely led a more frugal existence than our single friends.
Of course, I feel we are reaping the benefits now, as our kids are nearly out of the house, and we face the prospect of considerable money and time to spend on ourselves. I do not envy my friends who are in their 40s with very young kids.