Author Topic: WSJ: Middle Class Family Finances  (Read 9611 times)

Dibbels81

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WSJ: Middle Class Family Finances
« on: October 14, 2020, 06:14:44 AM »
https://www.wsj.com/articles/covid-unemployment-debt-middle-class-family-finances-11600122791

Published a few weeks ago, but I nominate this one for the Hall of Shame. A woe is me article with families making 175k prior to the lockdown. My favorite:

"Lynn Scott-White, 47, was furloughed from her job as a corporate travel agent at the end of March. Before the pandemic, she and her husband together earned roughly $150,000, she said."The Denton, Texas, couple pay $4,400 a month on their mortgage, four car loans and leases, and student debt, Ms. Scott-White said. She deferred lease payments on her Infiniti QX60 for three months and started paying again with unemployment benefits. Her husband traded in his Ford F-150 in August for a lower-cost car and reduced his original monthly payment of $820 by about $100, and his income covers the $2,100 mortgage."


maisymouser

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Re: WSJ: Middle Class Family Finances
« Reply #1 on: October 14, 2020, 07:49:57 AM »
The trading-in-a-truck-for-a-smaller-more-affordable-car part sounds semi-Mustachian!

dandarc

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Re: WSJ: Middle Class Family Finances
« Reply #2 on: October 14, 2020, 08:05:29 AM »
The trading-in-a-truck-for-a-smaller-more-affordable-car part sounds semi-Mustachian!
Cutting the payment by $700 $100 too. But I suspect this isn't likely to be a permanent change.

$2100 mortgage payment - I know property taxes are high in Texas, but we could buy another house just like the one we live in here in Florida and the payments would be lower than that combined.

Plus 4 car loans!? I assume at least one car for a teenager or what have you, but get rid of 2 of the cars.

Edit: reading comprehension fail. Cut "by $100" not "to $100".
« Last Edit: October 14, 2020, 09:03:59 AM by dandarc »

Simpli-Fi

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Re: WSJ: Middle Class Family Finances
« Reply #3 on: October 14, 2020, 08:11:48 AM »
The trading-in-a-truck-for-a-smaller-more-affordable-car part sounds semi-Mustachian!

Says he only cut his payment by $100...still a $700+ note

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Re: WSJ: Middle Class Family Finances
« Reply #4 on: October 14, 2020, 09:06:40 AM »
This family is a perfect example of the truth in MMM's comment that many middle class families are exploding volcanoes of wasteful spending.

TheFrenchCat

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Re: WSJ: Middle Class Family Finances
« Reply #5 on: October 14, 2020, 09:30:42 AM »
Are they really middle class though?  Our household grosses about 100k less than they do and we feel fortunate to be above the median family income.  Their debt alone is about what we net in a month. 

Also, it just boggles my mind that they're taking on debt for cars, especially while they still have student loans.   With that much money coming in, why wouldn't you just buy something reasonable in cash?

Maybe this family is more of a whole archipelago of exploding volcanos of waste.

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Re: WSJ: Middle Class Family Finances
« Reply #6 on: October 14, 2020, 10:25:44 AM »
You would think the foreclosure lawyer would know something ??

JLee

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Re: WSJ: Middle Class Family Finances
« Reply #7 on: October 14, 2020, 10:28:47 AM »
The trading-in-a-truck-for-a-smaller-more-affordable-car part sounds semi-Mustachian!
Cutting the payment by $700 $100 too. But I suspect this isn't likely to be a permanent change.

$2100 mortgage payment - I know property taxes are high in Texas, but we could buy another house just like the one we live in here in Florida and the payments would be lower than that combined.

Plus 4 car loans!? I assume at least one car for a teenager or what have you, but get rid of 2 of the cars.

Edit: reading comprehension fail. Cut "by $100" not "to $100".

Must be nice...the property taxes on my 3br house in NJ are $14.5k :(

jinga nation

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Re: WSJ: Middle Class Family Finances
« Reply #8 on: October 14, 2020, 10:47:35 AM »
I've noticed society's barometer for success is how you are perceived (house, vehicle, clothing, lifestyle) instead of what's in your wallet/bank/retirement accounts. Bad barometer!

I let the former have the attention and noise and be part of the latter gang with their private little green armies.

dandarc

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Re: WSJ: Middle Class Family Finances
« Reply #9 on: October 14, 2020, 10:58:29 AM »
The trading-in-a-truck-for-a-smaller-more-affordable-car part sounds semi-Mustachian!
Cutting the payment by $700 $100 too. But I suspect this isn't likely to be a permanent change.

$2100 mortgage payment - I know property taxes are high in Texas, but we could buy another house just like the one we live in here in Florida and the payments would be lower than that combined.

Plus 4 car loans!? I assume at least one car for a teenager or what have you, but get rid of 2 of the cars.

Edit: reading comprehension fail. Cut "by $100" not "to $100".

Must be nice...the property taxes on my 3br house in NJ are $14.5k :(
You choose to live there. Just like I choose to live in this house and not one that is 5 times as expensive (or more - Tallahassee has a home price for any budget quite literally). There are major benefits to living in high-tax areas though - tend to have better services in addition to the proximity to usually higher-paying job markets.

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Re: WSJ: Middle Class Family Finances
« Reply #10 on: October 14, 2020, 11:50:46 AM »
Are they really middle class though?  Our household grosses about 100k less than they do and we feel fortunate to be above the median family income.  Their debt alone is about what we net in a month. 

Gah, same. My sympathy is somewhat limited. I can't read the article because it's behind a paywall and we subscribe to enough newspapers, but I think reading it would only annoy me.

JLee

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Re: WSJ: Middle Class Family Finances
« Reply #11 on: October 14, 2020, 11:58:13 AM »
The trading-in-a-truck-for-a-smaller-more-affordable-car part sounds semi-Mustachian!
Cutting the payment by $700 $100 too. But I suspect this isn't likely to be a permanent change.

$2100 mortgage payment - I know property taxes are high in Texas, but we could buy another house just like the one we live in here in Florida and the payments would be lower than that combined.

Plus 4 car loans!? I assume at least one car for a teenager or what have you, but get rid of 2 of the cars.

Edit: reading comprehension fail. Cut "by $100" not "to $100".

Must be nice...the property taxes on my 3br house in NJ are $14.5k :(
You choose to live there. Just like I choose to live in this house and not one that is 5 times as expensive (or more - Tallahassee has a home price for any budget quite literally). There are major benefits to living in high-tax areas though - tend to have better services in addition to the proximity to usually higher-paying job markets.

Clearly this is obvious -- my point is that property taxes in Texas aren't that high. Sub-$3k average, or just over 1/4 of NJ.

Once remote work is more viable/commonplace I will likely leave, but the NYC job market is too lucrative to not be here right now.

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Re: WSJ: Middle Class Family Finances
« Reply #12 on: October 14, 2020, 01:40:39 PM »
I don't subscribe to WSJ so only saw that opening paragraph, but the phrase about "in a good year they could afford their debt" stood out. Makes me sad.  So many people are so overextended, and yes, it is their fault but it's still so sad to watch their credit funded worlds crash down around them. I also see how lucky I am, sure I've made some good choices, but I've made plenty of bad choices too and I've been really lucky, especially to stay employed this year.  Here's to planning for the bad years and saving extra in the good. 

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Re: WSJ: Middle Class Family Finances
« Reply #13 on: October 14, 2020, 01:55:39 PM »
You would think the foreclosure lawyer would know something ??

Good gods! How could a foreclosure lawyer not see what's happening in her cases?

I know a divorce mediator/lawyer who handles cases for the local rich. From what she tells me, it's stunning how many couples refuse to recognize that living beyond their means is part of their problem. Most have trouble acknowledging their limited assets.

"You're divorcing and neither of you can afford the Porsche. There's not enough money."

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Re: WSJ: Middle Class Family Finances
« Reply #14 on: October 15, 2020, 07:38:30 PM »
Are they really middle class though?  Our household grosses about 100k less than they do and we feel fortunate to be above the median family income.  Their debt alone is about what we net in a month. 

Gah, same. My sympathy is somewhat limited. I can't read the article because it's behind a paywall and we subscribe to enough newspapers, but I think reading it would only annoy me.

Ditto on the  enough subscriptions (WSJ doesn't even  allow a few  free  articles per month) and on the  annoyance. Four. Car. Loans. Teenagers? The "fun car"? Whaaat? At that income, this couple should be  in great shape!

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Re: WSJ: Middle Class Family Finances
« Reply #15 on: October 16, 2020, 11:01:05 AM »
SO easy to repair this budget. All it takes is stop spending everything.

TomTX

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Re: WSJ: Middle Class Family Finances
« Reply #16 on: October 17, 2020, 06:55:12 PM »

Clearly this is obvious -- my point is that property taxes in Texas aren't that high. Sub-$3k average, or just over 1/4 of NJ.

Dunno where you got that average, but I'm paying >$6k p.a. in property tax for my modest 3-bedroom house.

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Re: WSJ: Middle Class Family Finances
« Reply #17 on: October 17, 2020, 06:58:10 PM »
https://www.wsj.com/articles/covid-unemployment-debt-middle-class-family-finances-11600122791

Published a few weeks ago, but I nominate this one for the Hall of Shame. A woe is me article with families making 175k prior to the lockdown. My favorite:

"Lynn Scott-White, 47, was furloughed from her job as a corporate travel agent at the end of March. Before the pandemic, she and her husband together earned roughly $150,000, she said."The Denton, Texas, couple pay $4,400 a month on their mortgage, four car loans and leases, and student debt, Ms. Scott-White said. She deferred lease payments on her Infiniti QX60 for three months and started paying again with unemployment benefits. Her husband traded in his Ford F-150 in August for a lower-cost car and reduced his original monthly payment of $820 by about $100, and his income covers the $2,100 mortgage."

Return the Infiniti, sell the F150, sell the other two cars - and buy a ~2010 Honda Accord. Only one adult is working, you only need one car.

Stop buying shit you don't really need. Groceries from HEB, not Whole Paycheck. And no HEB Central Markup either. Plain, real foods.

Abe

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Re: WSJ: Middle Class Family Finances
« Reply #18 on: October 17, 2020, 07:14:38 PM »
I alone make twice as much as that couple, and just moved to Houston. My wife and I love HEB, even though there's a whole paycheck a block away. We did splurge and get new cars 5 and 3 years ago (Prius and Subaru). This article is a farce and slap in the face of actual middle-class people who are suffering. Not a bunch of upper-class yahoos who can't find their way around a $1 bill.

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Re: WSJ: Middle Class Family Finances
« Reply #19 on: October 17, 2020, 07:56:33 PM »
https://www.wsj.com/articles/covid-unemployment-debt-middle-class-family-finances-11600122791

Published a few weeks ago, but I nominate this one for the Hall of Shame. A woe is me article with families making 175k prior to the lockdown. My favorite:

"Lynn Scott-White, 47, was furloughed from her job as a corporate travel agent at the end of March. Before the pandemic, she and her husband together earned roughly $150,000, she said."The Denton, Texas, couple pay $4,400 a month on their mortgage, four car loans and leases, and student debt, Ms. Scott-White said. She deferred lease payments on her Infiniti QX60 for three months and started paying again with unemployment benefits. Her husband traded in his Ford F-150 in August for a lower-cost car and reduced his original monthly payment of $820 by about $100, and his income covers the $2,100 mortgage."

Return the Infiniti, sell the F150, sell the other two cars - and buy a ~2010 Honda Accord. Only one adult is working, you only need one car.

Stop buying shit you don't really need. Groceries from HEB, not Whole Paycheck. And no HEB Central Markup either. Plain, real foods.

Other than the fact that it would have to be tom thumb because we in north texas are not blessed with HEBs, I +1.

TomTX

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Re: WSJ: Middle Class Family Finances
« Reply #20 on: October 18, 2020, 07:36:59 AM »
https://www.wsj.com/articles/covid-unemployment-debt-middle-class-family-finances-11600122791

Published a few weeks ago, but I nominate this one for the Hall of Shame. A woe is me article with families making 175k prior to the lockdown. My favorite:

"Lynn Scott-White, 47, was furloughed from her job as a corporate travel agent at the end of March. Before the pandemic, she and her husband together earned roughly $150,000, she said."The Denton, Texas, couple pay $4,400 a month on their mortgage, four car loans and leases, and student debt, Ms. Scott-White said. She deferred lease payments on her Infiniti QX60 for three months and started paying again with unemployment benefits. Her husband traded in his Ford F-150 in August for a lower-cost car and reduced his original monthly payment of $820 by about $100, and his income covers the $2,100 mortgage."

Return the Infiniti, sell the F150, sell the other two cars - and buy a ~2010 Honda Accord. Only one adult is working, you only need one car.

Stop buying shit you don't really need. Groceries from HEB, not Whole Paycheck. And no HEB Central Markup either. Plain, real foods.

Other than the fact that it would have to be tom thumb because we in north texas are not blessed with HEBs, I +1.

At least that should be better than Brookshire Brothers you get in small towns (or even just Dollar General!)

My condolences to all without access to HEB.

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Re: WSJ: Middle Class Family Finances
« Reply #21 on: October 18, 2020, 09:20:39 AM »
Dunno where you got that average, but I'm paying >$6k p.a. in property tax for my modest 3-bedroom house.

No idea either, but our property taxes in the Houston-ish area (I can cross the road and be in Houston) is around $3k-ish. I'd have to do some digging to get an exact amount. Also, was a bit surprised when we kept getting multiple tax bills. The main one was around $3k, but there was at least one other, maybe a third. Plus HOA stuff. If we added all the taxes and fees to have a home, it's easily over $4k/yr. It's certainly possible to pay less than $6k in the Houston area, and the $3k sounds about right if we're talking about the "main" property taxes and nothing else. We also have what I consider a modest 3-bedroom house (though we are using the second living area as a fourth bedroom). And we're just talking about the Houston area of Texas; it's a pretty big state.

zolotiyeruki

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Re: WSJ: Middle Class Family Finances
« Reply #22 on: October 19, 2020, 01:14:11 PM »
I used to live in Houston (well, Kingwood, but it's annexed into Houston), and our property taxes on a valued-at-$115k house were $3600/year.  Of course, that was 10 years ago...

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Re: WSJ: Middle Class Family Finances
« Reply #23 on: October 19, 2020, 01:56:08 PM »
Y'all are being too generous w/HEB.  Wal-Mart and Aldi for a while would NOT be a bad idea to get them back on track!  Wal-mart does free curbside w/a $35 min spend; I know HEB charges for the service at least some of the time.

As for the property taxes:  I sold my Mom's home in Westchester, NY, about 18 months ago - a larger, newer 3 Bedroom 2 Bath with a finished basement on .25 acre, but it needed some updating.  Still a very nice home, but there's no way in hell I'd willingly pay the taxes of $28K/year to live there.  When I left, I was an hour north, paying $6K/year in taxes and $4K/year in HOA on a townhouse, and I didn't actually own the land!  I live in the northern suburbs of Austin, TX now, and was able to negotiate my taxes down to $5,800 for a 6 year old 3Br 2 Ba on 1/4 acre.  HOA of $400/year.

As for the foreclosure lawyer:  Kinda related to my Mom's house sale, due to my absolutely non-Mustachian sibling, we had to process said sale through bankruptcy court.  Our relationship hasn't been viable in years, so I worked directly w/the bankruptcy trustee, as she took over the ownership interest of my sibling's share when the BK was filed.  There was a lot of negotiations and court orders to allow me to pay for repairs to make the house sell in a bidding war, instead of a fire sale fixer, but those court orders protected my outlays so that I could be compensated for half out of my siblings share.  The math was never really complicated; it was really more along the lines of the order in which parties were paid.  Realtor commission and back taxes first, then split the proceeds, THEN deduct half of what I had fronted from my siblings part.  Getting the bankruptcy trustee to understand that she would be double dipping out of my share if she deducted that bill prior to the split, was like pulling teeth.  Getting the closing documents in order and the checks cut was another battle, and months after the close, she attempted to ask me for $2K back b/c of yet another non-error she could not comprehend.  When my sibling's BK case finally wrapped up, I laughed to see a note from the judge, that there was an accounting error in the final paperwork, which they simply allowed to stand, and deducted it from my siblings remaining funds, and not from the trustee's portion, who received a % of the estate for her servces.

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Re: WSJ: Middle Class Family Finances
« Reply #24 on: October 19, 2020, 06:20:48 PM »
Hmmpph.   Yet another reason using a trustee sucks.

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Re: WSJ: Middle Class Family Finances
« Reply #25 on: October 19, 2020, 09:28:12 PM »
Y'all are being too generous w/HEB.  Wal-Mart and Aldi for a while would NOT be a bad idea to get them back on track!  Wal-mart does free curbside w/a $35 min spend; I know HEB charges for the service at least some of the time.

As for the property taxes:  I sold my Mom's home in Westchester, NY, about 18 months ago - a larger, newer 3 Bedroom 2 Bath with a finished basement on .25 acre, but it needed some updating.  Still a very nice home, but there's no way in hell I'd willingly pay the taxes of $28K/year to live there.  When I left, I was an hour north, paying $6K/year in taxes and $4K/year in HOA on a townhouse, and I didn't actually own the land!  I live in the northern suburbs of Austin, TX now, and was able to negotiate my taxes down to $5,800 for a 6 year old 3Br 2 Ba on 1/4 acre.  HOA of $400/year.

As for the foreclosure lawyer:  Kinda related to my Mom's house sale, due to my absolutely non-Mustachian sibling, we had to process said sale through bankruptcy court.  Our relationship hasn't been viable in years, so I worked directly w/the bankruptcy trustee, as she took over the ownership interest of my sibling's share when the BK was filed.  There was a lot of negotiations and court orders to allow me to pay for repairs to make the house sell in a bidding war, instead of a fire sale fixer, but those court orders protected my outlays so that I could be compensated for half out of my siblings share.  The math was never really complicated; it was really more along the lines of the order in which parties were paid.  Realtor commission and back taxes first, then split the proceeds, THEN deduct half of what I had fronted from my siblings part.  Getting the bankruptcy trustee to understand that she would be double dipping out of my share if she deducted that bill prior to the split, was like pulling teeth.  Getting the closing documents in order and the checks cut was another battle, and months after the close, she attempted to ask me for $2K back b/c of yet another non-error she could not comprehend.  When my sibling's BK case finally wrapped up, I laughed to see a note from the judge, that there was an accounting error in the final paperwork, which they simply allowed to stand, and deducted it from my siblings remaining funds, and not from the trustee's portion, who received a % of the estate for her servces.

Can you explain the math behind the “double dipping” issue? I’m not getting it.

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Re: WSJ: Middle Class Family Finances
« Reply #26 on: October 20, 2020, 08:01:35 AM »
Y'all are being too generous w/HEB.  Wal-Mart and Aldi for a while would NOT be a bad idea to get them back on track!  Wal-mart does free curbside w/a $35 min spend; I know HEB charges for the service at least some of the time.

As for the property taxes:  I sold my Mom's home in Westchester, NY, about 18 months ago - a larger, newer 3 Bedroom 2 Bath with a finished basement on .25 acre, but it needed some updating.  Still a very nice home, but there's no way in hell I'd willingly pay the taxes of $28K/year to live there.  When I left, I was an hour north, paying $6K/year in taxes and $4K/year in HOA on a townhouse, and I didn't actually own the land!  I live in the northern suburbs of Austin, TX now, and was able to negotiate my taxes down to $5,800 for a 6 year old 3Br 2 Ba on 1/4 acre.  HOA of $400/year.

As for the foreclosure lawyer:  Kinda related to my Mom's house sale, due to my absolutely non-Mustachian sibling, we had to process said sale through bankruptcy court.  Our relationship hasn't been viable in years, so I worked directly w/the bankruptcy trustee, as she took over the ownership interest of my sibling's share when the BK was filed.  There was a lot of negotiations and court orders to allow me to pay for repairs to make the house sell in a bidding war, instead of a fire sale fixer, but those court orders protected my outlays so that I could be compensated for half out of my siblings share.  The math was never really complicated; it was really more along the lines of the order in which parties were paid.  Realtor commission and back taxes first, then split the proceeds, THEN deduct half of what I had fronted from my siblings part.  Getting the bankruptcy trustee to understand that she would be double dipping out of my share if she deducted that bill prior to the split, was like pulling teeth.  Getting the closing documents in order and the checks cut was another battle, and months after the close, she attempted to ask me for $2K back b/c of yet another non-error she could not comprehend.  When my sibling's BK case finally wrapped up, I laughed to see a note from the judge, that there was an accounting error in the final paperwork, which they simply allowed to stand, and deducted it from my siblings remaining funds, and not from the trustee's portion, who received a % of the estate for her servces.

Can you explain the math behind the “double dipping” issue? I’m not getting it.

I think the implication would be that the proceeds after the subtraction would be divided 50/50.  So instead of say (100k/2) - 25k = 25k to brother 75k to H, it would have been (100k - 25k) /2 = 37.5k to both with the extra 25k going who knows where.

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Re: WSJ: Middle Class Family Finances
« Reply #27 on: October 20, 2020, 08:26:07 AM »
I'm also not subscribed to the WSJ, but I'd be far more interested in the comments on that article. It's hilarious to consider a couple in Texas earning $150k being considered middle class.

Just Joe

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Re: WSJ: Middle Class Family Finances
« Reply #28 on: October 20, 2020, 10:05:16 AM »
Why do people put themselves out there like that? Embarrassment doesn't figure into it?

PMG

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Re: WSJ: Middle Class Family Finances
« Reply #29 on: October 20, 2020, 11:03:36 AM »
humble brag?

DadJokes

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Re: WSJ: Middle Class Family Finances
« Reply #30 on: October 20, 2020, 11:09:26 AM »
Why do people put themselves out there like that? Embarrassment doesn't figure into it?

They probably think that it's normal. They live in their own little bubble and think that everyone else is just like them.

I think I'm guilty of similar thoughts. If I can live frugally (albeit on a household income of $100k), then it just makes sense that everyone can.

Just Joe

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Re: WSJ: Middle Class Family Finances
« Reply #31 on: October 21, 2020, 08:37:28 AM »
True!

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Re: WSJ: Middle Class Family Finances
« Reply #32 on: October 21, 2020, 11:15:28 AM »
Why do people put themselves out there like that? Embarrassment doesn't figure into it?

Could be they feel like they're getting free investment advice. I subscribe to the WSJ and most everyone they profile in such stories regardless of income is a financial trainwreck, just like the stories Money magazine used to do. It's pretty much Dave Ramsey callers in print with their accumulation of car and student loans, credit card debt, etc.

remizidae

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Re: WSJ: Middle Class Family Finances
« Reply #33 on: October 21, 2020, 01:37:51 PM »

No Job, Loads of Debt: Covid Upends Middle-Class Family Finances
The pandemic is wreaking havoc in loan-laden white-collar workers’ households; ‘I will never claw my way out of this situation’
‘It frustrates me to not be able to earn a living,’ says lawyer Alysse Hopkins. Natalie Keyssar for The Wall Street Journal
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Until mid-March, Alysse Hopkins earned a comfortable living in Rockland County, N.Y., representing clients in foreclosure cases and personal-injury lawsuits.

In a good year, the 43-year-old lawyer and her husband, Ian Boschen, 41, together brought in about $175,000, the couple said—enough to cover the mortgage, two car leases, student loans, credit cards and assorted costs of raising two daughters in the New York City suburbs.

After the coronavirus halted many foreclosures and closed courts, her work dried up. Unemployment benefits have helped, Ms. Hopkins said, but the family is running low on savings and can’t keep up with $9,000 in monthly debt payments including mortgage installments. “It frustrates me to not be able to earn a living,” she said. “I have a law degree, almost 20 years of practice.”

Millions of Americans have lost jobs during a pandemic that kept restaurants, shops and public institutions closed for months and hit the travel industry hard. While lower-wage workers have borne much of the brunt, the crisis is wreaking a particular kind of havoc on the debt-laden middle class.

Debt didn’t present a major problem before the coronavirus. The job market was booming and median household incomes were rising, allowing families to keep up with payments.

American families with nonhousing debt making over $98,018 a year in pre-tax income owed an average of nearly $92,000 of such debt in 2016. That’s up 32% from 2004, adjusted for inflation, according to an analysis of Federal Reserve data by the Employee Benefit Research Institute, a nonpartisan nonprofit research group.
Consumer debt, including student loans and auto loans, have contributed to rising U.S. householdindebtedness.Total debt balance among U.S. householdsSources: New York Fed Consumer Credit Panel; Equifax
.trillionHousing debtStudent LoanAuto LoanCredit CardOther
2003'05'10'15'2002468101214$16

Average nonhousing debt owed by families making $52,655 to $98,018 rose about 33% over the 12 years to $33,378.

Before the pandemic, Americans had amassed $4.2 trillion in consumer debt, excluding mortgages, according to the Federal Reserve Bank of New York, a record even when adjusting for inflation. Housing debt added an additional $10 trillion to the tally.

The coronavirus has spared few industries and expanded unemployment benefits designed to replace the average American income didn’t cover all the lost pay of higher-earning workers, especially in or near expensive cities. The extra $600 weekly payments expired in July, putting them even further behind.

“What I see happening here is a core assault on successful college-educated families, which are the new breed of middle-class American families,” said Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce. “There’s a professional workforce that’s getting slammed.”

Roughly six months into the pandemic, many lenders that let borrowers skip monthly payments now expect to get paid again. They have set aside billions of dollars to cover potential losses on soured consumer loans—an acknowledgment that America’s decadelong debt binge has come to an end.

Credit-card debt has fallen in recent months. But with a big chunk of government assistance gone, Congress is still haggling over a second round of coronavirus relief. President Trump signed an executive order in August to provide an extra $300 a week in federal unemployment benefits. The payments haven’t been distributed by every state yet, and Democrats say the president’s order violated congressional-spending authority.
The increase in balances owed for student loans and auto loans has outpaced housing debtPercentage change in total household debt balance, adjusted for inflationSources: New York Fed Consumer Credit Panel; Equifax
%Student loanAuto loanHousing debt
Credit card2003'05'10'15'20-50050100150200250300350400
White-collar pain

Unemployment has fallen from its pandemic peak of near 15%, but the rate stood at 8.4% in August, up from 3.5% in February, according to the Bureau of Labor Statistics. Unemployment for the arts, design, media, sports and entertainment was 12.7% in August, more than triple its year-earlier level. In education, it more than doubled to 10.2%. Sales and office unemployment was 7.8% in August, up from 3.8% in August 2019.

Architects and engineers, who earn $1,826 in average weekly pretax income, well above the $1,389 average among full-time wage and salaried workers, have seen unemployment rise to 3.7% from 0.8% a year earlier. Unemployment for computer and math occupations, which earn $1,919 a week on average, more than tripled to 4.6%.

It could get worse. “The pain so far in the economy has largely been at the lower end of the pay scale,” said Discover Financial Services Chief Executive Roger Hochschild, adding that many of “the white-collar layoffs are still to come.”

Lynn Scott-White, 47, was furloughed from her job as a corporate travel agent at the end of March. Before the pandemic, she and her husband together earned roughly $150,000, she said.

The Denton, Texas, couple pay $4,400 a month on their mortgage, four car loans and leases, and student debt, Ms. Scott-White said. Minimum required monthly credit-card payments total about $700. The debt was manageable pre-pandemic, she said.

She deferred lease payments on her Infiniti QX60 for three months and started paying again with unemployment benefits. Her husband traded in his Ford F-150 in August for a lower-cost car and reduced his original monthly payment of $820 by about $100, and his income covers the $2,100 mortgage.
Lynn Scott-White is preparing to switch careers. ‘I didn’t think I would have to do this,’ she says.
Photo: Justin Clemons for the Wall Street Journal

After about 24 years in the travel industry, Ms. Scott-White is preparing to switch careers, concluding it could be a long time before corporate travel returns to previous levels. In August, her employer gave her three options: severance of a week’s pay for each year employed, unpaid leave until late March or continue on furlough.

She resigned, opting to take the severance. She returned to college last month to complete a bachelor’s degree in kinesiology to pursue a sports-medicine career. She borrowed $5,000 against her 401(k) to help pay for it. “I didn’t think I would have to do this,” she said. “I’m trying to decide what I want to be when I grow up.”

By some measures, the outlook for higher-earning workers appears worse than during the 2008 financial crisis. In August, about 3.3 million people age 25 and over with bachelor’s degrees or higher were unemployed, up from 1.2 million in February, according to the Bureau of Labor Statistics. During the last downturn, that number peaked at about 2.2 million.

Postings for jobs with salaries over $100,000 were down 19% in August from April, while postings for all other salary categories increased, according to job-search site ZipRecruiter Inc.

American Airlines Group Inc. and United Airlines Holdings Inc. have outlined plans to furlough or lay off thousands of employees on Oct. 1, when federal aid expires, unless they receive more government assistance. Business-software company Salesforce.com Inc. is eliminating 1,000 jobs; a spokeswoman said the company is also adding 4,000 jobs over the next six months.

MGM Resorts International and Stanley Black & Decker Inc. notified some furloughed employees they would be laid off. The companies said they have brought back, or expect to bring back, many of these employees.

America’s biggest banks have indicated they are preparing for a protracted downturn to hurt businesses in industries that weren’t immediately affected by shutdowns.
Share Your Thoughts

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JPMorgan Chase & Co. says it expects the U.S. to add roughly 5.4 million jobs in the third and fourth quarters. That would leave the U.S. economy with about 9.2 million fewer jobs since February.

“The pandemic has a grip on the economy,” Citigroup Inc. CEO Michael Corbat said when the bank reported second-quarter earnings in July, “and it doesn’t seem likely to loosen until vaccines are widely available.” This month, the bank said many customers that previously enrolled in deferment programs are making payments.
‘Very dire’

Terri Smith, 64, said her job analyzing legal expenses for her employer was eliminated in a round of cost-cutting. Even with the extra $600 a week, unemployment didn’t cover her lost earnings, and she is now down to $285 after tax in weekly unemployment benefits.

The monthly mortgage payment on her Charlotte, N.C., home is $1,550, she said. Her car payment is $550. Health insurance costs $600 a month, and a recent hospital visit cost $7,500 in out-of-pocket expenses. She has dipped into savings to keep up with bills and is thinking about withdrawing from her 401(k) or signing up for loan-deferment programs until she can find a job.

“I don’t have a plan. It’s very dire,” she said. “I’m getting very nervous.”

Many people who have jobs are struggling with pay cuts. As of August, 17 million workers were getting paid less due to the pandemic, said Mark Zandi, chief economist at Moody’s Analytics. Some 9.5 million took pay cuts; the remaining 7.5 million are working fewer hours, he said.

Steven Sickinger’s income fell sharply in the spring, he said, when customers stopped coming to the auto-repair shop he managed. Concerned that the shop was at risk of shutting down, Mr. Sickinger, 55, quit and took another job he considered more secure making $50,000—35% less than the $77,000 he made in 2019.

The pay cuts have made it difficult for the Tucson, Ariz., resident to keep up with bills. He said he owes at least $24,000 on his credit cards. His credit union let him skip his roughly $655 monthly payments on the loan for his Ford F-150 in June and July. He said he hasn’t used his credit cards in months, but interest charges and late fees are pushing his balances higher. Eight of his credit cards have been reported late, he said. Pre-pandemic, his credit report showed an on-time record going back to 2014.

Before the coronavirus, his plan was to pay off the debt in about 2½ years and would then begin preparing for retirement. Now, Mr. Sickinger said, he is in the process of filing for bankruptcy: “I will never claw my way out of this situation.”

The economy is reviving in parts of the country including New York, where Ms. Hopkins lives. Most courts in the state have reopened. But law firms in New York City and Long Island that used to hire her to avoid the hour-or-more drive are now handling their cases online.
Ms. Hopkins says the pandemic has drastically reduced her work.
Photo: Natalie Keyssar for The Wall Street Journal

Ms. Hopkins is working again, taking virtual depositions, but the volume is nothing like it was. She had six assignments in August and a few so far this month. Pre-pandemic, she appeared in court on average for four to six cases a day. “I don’t know if it’s ever going to go back to that,” she said.

She and Mr. Boschen paused their $750 in car payments for April and May. They got a one-month break on a $680 payment on a personal loan taken for a bathroom renovation. Mr. Boschen said his nearly $800 in monthly student-loan payments are deferred through December. That, and money set aside for their daughters’ summer camp, freed up enough to help cover their $3,000 monthly mortgage payment and $1,500 monthly health-insurance premium.

Ms. Hopkins’s weekly state unemployment of $441 after taxes ended last week, she said, at the same time that she received a $262 deposit, the first of her unemployment benefits tied to President Trump’s August executive order.

Ms. Hopkins said she recently took out a $36,500 Small Business Administration loan, because she qualifies as a small business through her legal work, to cover the work bills. She said she has 30 years to repay it.

SunnyDays

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Re: WSJ: Middle Class Family Finances
« Reply #34 on: October 21, 2020, 02:06:33 PM »
Pffft.  Cry me a river!

zolotiyeruki

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Re: WSJ: Middle Class Family Finances
« Reply #35 on: October 21, 2020, 03:17:47 PM »
Boy, this sure makes me happy our only debt is our mortgage, and that we don't have a taste for expensive cars.

mm1970

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Re: WSJ: Middle Class Family Finances
« Reply #36 on: October 21, 2020, 03:25:22 PM »
Boy, this sure makes me happy our only debt is our mortgage, and that we don't have a taste for expensive cars.
Same.  The average non mortgage debt for people making over $100k is $92k?? 

OMG.  Cars?  Credit cards?  School loans?

ChickenStash

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Re: WSJ: Middle Class Family Finances
« Reply #37 on: October 21, 2020, 03:34:44 PM »
Quote
“What I see happening here is a core assault on successful college-educated families, which are the new breed of middle-class American families,” said Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce. “There’s a professional workforce that’s getting slammed.”

The Drama Llama approves this quote.

JLee

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Re: WSJ: Middle Class Family Finances
« Reply #38 on: October 21, 2020, 03:47:41 PM »
Boy, this sure makes me happy our only debt is our mortgage, and that we don't have a taste for expensive cars.
Same.  The average non mortgage debt for people making over $100k is $92k?? 

OMG.  Cars?  Credit cards?  School loans?

Cars, student loans, etc?  I have a loan for insulation/air sealing improvements to my house, that is now probably about $9k at 0% ($3k rebate, 0% @ 10 years state-subsidized program) and a solar loan at ~$32k.  If you threw in two $30k car loans I'd be at 92k.

diapasoun

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Re: WSJ: Middle Class Family Finances
« Reply #39 on: October 21, 2020, 03:49:51 PM »
Boy, this sure makes me happy our only debt is our mortgage, and that we don't have a taste for expensive cars.
Same.  The average non mortgage debt for people making over $100k is $92k?? 

OMG.  Cars?  Credit cards?  School loans?

This absolutely blew my mind. I mean, I can easily see it -- $175k in student loan debt alone will get you there, and there are plenty of MDs and JDs with that kind of debt -- but still. Poof there went my mind.

zolotiyeruki

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Re: WSJ: Middle Class Family Finances
« Reply #40 on: October 21, 2020, 06:01:27 PM »
Boy, this sure makes me happy our only debt is our mortgage, and that we don't have a taste for expensive cars.
Same.  The average non mortgage debt for people making over $100k is $92k?? 

OMG.  Cars?  Credit cards?  School loans?

This absolutely blew my mind. I mean, I can easily see it -- $175k in student loan debt alone will get you there, and there are plenty of MDs and JDs with that kind of debt -- but still. Poof there went my mind.
They've been in the workforce for 20 years, and still have student loans.

Abe

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Re: WSJ: Middle Class Family Finances
« Reply #41 on: October 21, 2020, 06:42:25 PM »
Here's my standard take on physician debt (don't know enough about dentists to weigh in on that):

Average debt (undergrad + med school): $200k
Average primary care physician salary (after single person taxes and retirement contribution, using CA as example): $140k

$140k/12 = $11.7k per month

Average US salary (after taxes): $44k/12 = $3.7k per month

$11.7 - $3.7 = $8k more per month than average US worker.

Time to pay off $200k debt at $8k/month, assuming 7% interest rate = 28 months
Same at $4k/month: 60 months

It's not hard. It's just math. No whining allowed from MDs. It's what I tell my junior trainees when they're working 80 hours a week for $15/hr  (60,000/80*48 = $15).
« Last Edit: October 21, 2020, 06:44:04 PM by Abe »

SwordGuy

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Re: WSJ: Middle Class Family Finances
« Reply #42 on: October 21, 2020, 08:43:53 PM »
They've been in the workforce for 20 years, and still have student loans.
One of the debt racers on a different personal finance forum I frequent just finished off the last of her 1994/5 student loans -- and has another 101,000 in student loan debt to go.

Lordy.

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Re: WSJ: Middle Class Family Finances
« Reply #43 on: October 22, 2020, 05:55:54 AM »
Why do people put themselves out there like that? Embarrassment doesn't figure into it?

They probably think that it's normal. They live in their own little bubble and think that everyone else is just like them.

I think I'm guilty of similar thoughts. If I can live frugally (albeit on a household income of $100k), then it just makes sense that everyone can.

At times I see this in person at work.  I work within a specialized category for the US federal government.  With the exception of new hires (fewer than 5 years on) we all make approximately the same amount of money.  Once I’m eligible to retire with our pension (at age 47), I 100% will never have to work again.  Very rarely do I meet someone who talks like me, it’s all like military retire’s what is your retirement job going to be.  But at the same time I hear about new cars and other expensive purchase.

Just Joe

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Re: WSJ: Middle Class Family Finances
« Reply #44 on: October 22, 2020, 07:25:04 AM »
Boy, this sure makes me happy our only debt is our mortgage, and that we don't have a taste for expensive cars.

Ain't that the truth. Even if the income is there, who wants to juggle all those payments? I'll happily live a less shiny existence.

TheFrenchCat

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Re: WSJ: Middle Class Family Finances
« Reply #45 on: October 22, 2020, 05:43:47 PM »
9 THOUSAND a month in debt payments?!?  There is no way I would be able to handle the stress of that, even if I had a high income.  Why would you do that to yourself?

Malcat

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Re: WSJ: Middle Class Family Finances
« Reply #46 on: October 22, 2020, 06:56:34 PM »
Here's my standard take on physician debt (don't know enough about dentists to weigh in on that):

Average debt (undergrad + med school): $200k
Average primary care physician salary (after single person taxes and retirement contribution, using CA as example): $140k

$140k/12 = $11.7k per month

Average US salary (after taxes): $44k/12 = $3.7k per month

$11.7 - $3.7 = $8k more per month than average US worker.

Time to pay off $200k debt at $8k/month, assuming 7% interest rate = 28 months
Same at $4k/month: 60 months

It's not hard. It's just math. No whining allowed from MDs. It's what I tell my junior trainees when they're working 80 hours a week for $15/hr  (60,000/80*48 = $15).

I'm in Canada and dental school debt is way more than that here, so I can only imagine what it is in the US. I also know A LOT of new grad dentists in the US who take years to build up their career to making that level of income, so it's not quite as rosy as all that.

It's years brutal and abusive schooling and then years of brutal and abusive work, all to basically live on minimum wage well into your 30s. It's depressing and demoralizing.
I have a lot of patience for their whining.

20957

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Re: WSJ: Middle Class Family Finances
« Reply #47 on: October 22, 2020, 07:09:58 PM »
I have a hard time understanding people with those kinds of high incomes who take out loans (outside of mortgages and old student loans) that they can't afford to pay off at any moment. To me you basically can't afford a new bathroom if you HAVE to take out a loan. Now, a low-interest loan because you don't want to cash out investments and it makes it easier to cash-flow, fine, but credit cards? At over $100k? I'm no great mustachian, so when I shake my head they must be ridiculous.

PDXTabs

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Re: WSJ: Middle Class Family Finances
« Reply #48 on: October 22, 2020, 07:15:24 PM »
Average debt (undergrad + med school): $200k
Average primary care physician salary (after single person taxes and retirement contribution, using CA as example): $140k

$140k/12 = $11.7k per month

Average US salary (after taxes): $44k/12 = $3.7k per month

$11.7 - $3.7 = $8k more per month than average US worker.

Time to pay off $200k debt at $8k/month, assuming 7% interest rate = 28 months
Same at $4k/month: 60 months

It's not hard. It's just math. No whining allowed from MDs. It's what I tell my junior trainees when they're working 80 hours a week for $15/hr  (60,000/80*48 = $15).

As far as I can tell from your math, given the opportunity cost of getting the MD, a career in software with and undergraduate degree would be more lucrative. Some complaining might still be in order, because working 80 hours a week is dumb in any profession and I'm not at all convinced that it is good for the doctors or the patients.

Malcat

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Re: WSJ: Middle Class Family Finances
« Reply #49 on: October 22, 2020, 08:14:49 PM »
I have a hard time understanding people with those kinds of high incomes who take out loans (outside of mortgages and old student loans) that they can't afford to pay off at any moment. To me you basically can't afford a new bathroom if you HAVE to take out a loan. Now, a low-interest loan because you don't want to cash out investments and it makes it easier to cash-flow, fine, but credit cards? At over $100k? I'm no great mustachian, so when I shake my head they must be ridiculous.

I'm not making excuses for them, but part of it is that with school, they just get so numb to debt, it just doesn't register anymore and they've programmed themselves to not worry about what they can pay off over time, because if they did, it would drive them insane. Also, most of them have never had a full time job, so have no sense of what "normal" is.

Most med folks I know graduate with the equivalent financial knowledge of a typical 17 year old. Many of my classmates didn't understand the basics of income tax just months before they graduated and started cashing 5 figure paycheques...and didn't know how to calculate how much to put aside for taxes.

They also jump from school into basically their 30s, so the stuff that others build up over time: cars, house, furniture, wedding, kids, etc, they tend to slam into all at once as they try to catch up with their peers. They can only conceptualize monthly payments. The big picture is almost unfathomable.

This just gets them even more numb to debt and payments.

Again, none of it is excuses, but I spent A LOT of time talking to doctors and dentists about their personal finances. It's a story I saw play out over and over and over again.

These aren't stupid people, there are reasons so many of them fall into the same traps. I've hosted events where I started with the question "okay, who here has a doctorate?" and followed with "good, now let's try to keep that in mind when this finance talk starts making you feel dumb"