Our "high consumption lifestyle"
 

Discuss.

Do you feel this is a fair statement? Just based off what I've seen on this forum with the number of "financing" threads and "can I afford this car" threads, I'm going to say it's absolutly true. People are just getting out of college, haven't even estabished themselves and are buying new cars and sometimes even homes. These in themselves aren't bad at all, it's just the timing is crazy. They live on top romen and drive an old pinto for years, then get out of college, get a job and all of a sudden are living on the top of the world….well, as long as their credit cards will allow.

IMHO, the "you only live once" phrase has become a cop-out for being irresponsible. I think that it has some good ideas in it as in "go for your dreams" and "shoot for the moon" but I think it's been perverted into something that leads people to make STUPID decisions that hurt their finances, their health, and their future.

This is a bit of a rant, I know, but what do you guys think? I am ABSOLUTLY guilty of this, so I am not pointing the finger at eveyone else and forgetting myself. I think just having myself realize this is a huge step. Anyone else just step back and go, "what in the hell am I doing buying crap that I don't need to impress people I will never meet?!" The idea of "the things you own, end up owning you" feels very familiar right now.

I think listening to Drake is a stupid decision too.


As for the finance thing. People are quick to get the things they want. We live in a instant gratification society. I am guilty of this. I could have waited another half year and just bought a twin. Instead I chose to finance and have the car now.

Of course it is true. Look at these people spending thousands on mods and then they have a for sale thread for their car stating they need to sell it due to financial needs. Really?

I used to not understand why people would get offended if you asked about their finances since I have no problem talking about mine. But I guess it is kind of embarrassing if you are making one poor decision after another.

On the one hand, you ARE only young once (dementia doesn't count), and it's a lot easier and more rewarding to do some things when you're younger. You can't really spend hours in a racing seat when you're 65 and the seat makes your back hurt and you can no longer bend your knees enough to get into the car. And there's no guarantee that you'll make it to 65 anyways, so why not have fun when you can?

On the other hand, it needs to be done responsibly. You need to make sure you're in a solid place in life before you sign your life away to pay for a new house or a shiny new car. You need to make sure you can live before you spend money on frivolities that you may not be able to afford. For myself, I bought my car when I did because I have five years left in the military, so I have a guaranteed paycheck for five more years. I don't want to be scrambling for a job in five years because I have payments I need to make.

Also, people have forgotten that the Declaration of Independence says "preservation of life, liberty, and the pursuit of happiness," not "preservation of life, liberty, and a guarantee of happiness." Too many people think they're entitled to a big screen tv or a brand new car or a well-paying job. They don't realize that they have to pursue those things and that it doesn't always work out like they want it to.

Goes back to the thread where they discussed having some sort of finance class as part of general education in High School.

I forgot the thread, but people seem to short sighted when it comes to finance in general these days. There are too many programs to bail out people who make poor financial choices in this country in my opinion.

To the extent that people are not necissarily afraid of making them. No longer are questions like "What if I lose my job?" and "What if we get pregnant?" and other of the sort are really taking seriously and given the proper weight.

AGREED! It's taken me TWO YEARS to just clean up my habbits and I'm still living outside my means based on past decisions. It's crazy. I'm just now at that point that I'm comfortable talking about my finances because I'm headed in the right direction. This is not just a simple "clean up," it's still going to be a couple years before I can say that I am "doing well" when it comes to money.

I agree!! Balance! It doesn't mean you can't have it, just be patient for it. Make sure you have all the other areas of your life covered, then go for it. Why not? Your future shouldn't suffer for your present.

I absolutly think this needs to be a class. Most people coming out now don't even understand the idea of compund interest. When I explain it to them and show them numbers their eyes literally look like :confused0068: Problem is that usually, they have already starting living in their means and have little to no money to throw into anthing avenue making them money using this idea


My goal right now is to get my monthly spending down to under $5k/month. Even that is pretty insane to me, getting "down" to $5k/month

I, too am very guilty of spending way to much of my time, mental capacity, and budget on this car. I think a lot of the root issues have been discussed above. While I do think cars can be enjoyed responsibly, it's very difficult to do so in a pure way.

I have quite an extensive education in business and finance and yet, I still find myself in this irresponsible cycle of spending. I think a lot of us, myself included, idolize our cars. One of the things I'm mentally trying to get past right now is trying to keep this thing pristine. I really shouldn't care but man it demands so much of my attention - for example, I scraped the underside of my bumper pretty bad on a parking stop (mental blank when I was pulling in) and my mind is still drawn to that blemish and I feel like it's preventing me from enjoying the car.

Overall, it's a work in process, trying to get out of this funk. It's definitely a lesson learned and will be applied to future aspects of life.

I do what I want

As you wish guys, the key is balance. Like Master Oogway said: Yesterday is history, tomorrow is a mystery, but today is a gift. That is why it is called a "present".

I personally make irresponsible purchases, but not financially irresponsible purchases.

In a previous post I stated that I could have waited 6 months and not financed the car but I chose to finance it and have it now. That decision was because I had already waited a year waiting to see what would happen with the car, and didn't want to wait any longer.

That decision was irresponsible, but not financially irresponsible. Financing the vehicle resulted in a 20% loss in my monthly discretionary income. It in no way affected the money I needed to sustain my lifestyle.
Same goes with the aftermarket part purchases. Those purchases only dipped into money that was already discretionary.

Those purchases were all irresponsible though. Irresponsible in: 1) Did I need to buy a car like this for 30 thousand dollars, or could i just ride out my scion for another 5 years? The responsible thing to do would be to just keep rockin' the scion.
2) Did I need to buy those parts for my already irresponsible purchase? Again the answer is no. I could have used that money for something useful, like solar panels for my house.

The point I am trying to make is: Irresponsible purchases are not necessarily financially irresponsible.

But you can't take it with you, and lets face it. We all want to have fun.

Because YOLO

I dunno, I feel like cars are the thing that really get people. I can't bear spending money on most things, but I will dream all day long about what to spend on my car given some budget, and I'll also dream about how to edge that budget up given some level of income to afford something newer and shinier. Sure I know people out of college who rent super nice apartments in the city to the tune of 3k a month, people who can burn tens of thousands going out, but the demise of most young people is the fancy car, because everyone wants one. If I went to some kind of job paying a solid 100 something k out of college I'd probably not hesitate to grab myself a 2 year old Porsche 911 and then do a motor swap on my MR2 even though it'd be financially idiotic lol.

By the way suaveflooder, 5k a month, that's pretty impressive. Glad you're living it up :D Living the college student life my expenses are about 1.2k a month all in, car, apartment, and other.

I thought this may help bring things into perspective.

Lol, spare some change buddy?


I have to agree with many of the opinions above. With some caveats. For example if you can, buy a house. Don't look at it as a reckless choice but as an investment. There's never been a time with such promise for the housing market. If you're young and it won't bust you get that FR-S. Keep it. Drive it into the ground. Enjoy it. Who knows, someday you might be able to take your grandson out to the garage of the home you bought today and say "There it is boy, a first gen. FR-S." Then watch as his eyes pop out and he says back "WOW grandpa, sure glad you didn't buy one of those pos BRZ's."

I greatly look forward to experiencing this day! Slightly related - took my younger brother (10 years my junior) for a ride. He had his eyes closed for more than half the time. Oh how far the apple has fallen...

Bet he dug the hell out of it and will always remember that day.

Debt is truly the antichrist.

first and foremost, after college I will not touch my car untill I have no student loans left, no matter how long that takes. Until I can afford the replacement parts if those parts break, then ill start spending my money in larger volumes. Im not exactly one of those guys that would buy all the parts in one night and spend a good chunk of cash doing it. It would have to be an on going labor of love.

"Oh hey Chris whats the car part for this month?"
"Oh I dont know [insert potential coworkers name here] maybe ill lump two months together and buy a Cusco 4.556 FD and skip next month."

I see spending money as a journey more or less with any large things in life. Like a car, its going to be an on going experience, why get it all over in the next week, or month? Why not space it out so you can savor the experince of it? Why go into debt when theres alot better ways to stay finacially stable while still being happy?

I guess it has to do with parenting and how the people were raised with the dollar. My dad made me work hard for my first few dollars.

TL;DR
My dad made me work hard for my first few dollars. He made me appriciate it, so I feel less likely to give it up, so I inherently value the things I trade my money for, more.

Did your dad buy the car for you?
1st year in to college so you must be rather young?
Not bad at all actually, seems like you got your head screwed on although paying off student loan sounds like it'll take awhile.

My problem is that I like nice things. I'm older now (33) but I was definitely stupid with my money growing up. You live and you learn, most people are never taught how to manage money correctly, so when they get a job they're suddenly "rich". If they weren't saving before, they probably wont now.

That being said, it's not impossible to recover, I have done it several times in my life where I've had to step back and take a hard look at my debt and what I've been spending my money on. You force yourself to go through a lean couple of years but it's doable.

I'm a lot better now, but I still spend way too much money on stereos, video games and car parts. I make a reasonably comfortable living so I should be able to treat myself every now and again.

I am only 23 years old and easily have spent most of my earnings on cars since I was 16, probably around $100k. Luckily I still managed to buy a home at the age of 22, and have owned a couple of really nice cars due to budgeting myself well.

I have a close friend in same boat, the difference is... he is a drugdealer.

I make my money legitimately.

2nd year in college coming up on 21, me and my dad split the bill. That was the deal we made if I wanted a new car. if it seems my student loans will take forever, itll depend on what kind of job I have and other underlying circumstances when I start spending my money on the car.

First things first; apartment, utilities payments, student loan payments, gas money, rent, all that splish splash. Me and my girlfriend arent very keen on getting a house until later on in life, about 30 or so, that way morgage payments coupled with everything else dont kill us, provided we've found good enough jobs first. Shes going to be a nurse.

Buy into real estate as soon as you safely can, no point putting money into rent when it could be paying off an asset and its interest.

I will qualify that statement by saying "buy into real estate as soon as you can, once you're reasonably sure you're going to be in that location for a long period of time."

Buying a house around your girlfriend's college will only be good for you if you guys get jobs around there. You might need to move around a bit, or across the country, to find the jobs you want. Buy a house once you're settled into a particular location.

I don't know about that, real estate is typically an extremely leveraged position. It's only a sound investment if the interest rate is low enough and the market isn't too hot. Also depending on the house and area, rent can be cheaper than paying mortgage + property tax by a fair amount.

In terms of ROI, a mortgage regardless of amount is a better decision than rent.

On a budget/what can I afford, that is subjective. I totally understand having to go for cheap rent because you can't afford a mortgage or can't get approved to finance a home.

But you will never get any return on rent.

Living in your mums basement like me for a couple bills a month is better than rent. 10x better if you can do it for free

:D

That's why I said as soon as you SAFELY can. And as stated above rent has no ROI whereas a mortgage does.

Ill start thinking about a house as soon as the criteria have been met; stable local job, flush with disposable income not already taken up by utilities gas/insurance, food etc, good neighborhood. Ofcourse this is a ways away, but still its good to know I have my head on straight. Atleast moreso than alot of kids my age.

Before I bought my house, I rented a duplex for about 4 years. In that 4 years, I spent roughly $50,000 in rent. That's $50K that I will never see again and essentially spent on making somebody else richer. Enough was enough. 2.5 years ago I bought a nice townhouse. I only put 5% down as I financed through FHA so it didn't take too long to come up with the down payment. Net, I spent around $14K to get into my place, including down payment and closing costs. Fast forward to today, I have since refinanced out of FHA to a conventional loan with a slightly higher interest rate. My house is now appraised at double what I bought it for and I have over $200,000 in equity in just 2.5 years. There are a few ppl in my complex that are renting townhouses for $1000 MORE a month than what my mortgage payment is (included in my payment is the principal, interest, property tax and home owners insurance)! That's just sad. Rent has become out of control and is nothing but pissing away money. Buying my townhouse was by far the smartest decision I've made. Buying a house is a win/win situation. Just don't jump into it unless your comfortable.

A mortgage is not better than rent if the house does not appreciate in value, and it's worse if the house depreciates. It's all a function of the interest and the value fluctuations, the numbers can come out one way or another depending on scenario.

It's like saying cash is never better than stocks or bonds, cash will depreciate (just like rent goes out the window) but stocks or bonds can depreciate faster.

That is such a short term view point. There is no instance where land does not appreciate in value. Even chernobyl will appreciate in value one day.

I make good money, but I live paycheck to paycheck. If I were to lose my job, I'd immediately have to sell my car and find a new place to live. It sucks admitting that.

I was fortunate enough to have parents that put away money for my university tuition and to find a relatively well-paying job with good security without getting a degree and having only completed a few years part-time at community college. I wound up putting some of that money towards buying a house, and I have to tell you, homes are a place to live, not an investment. Having a house is really awesome, but sometimes I'd rather just be renting.

First of all, as a first-time homebuyer, the closing costs will absolutely rape you. I couldn't believe the amount of people lining up to collect their $500 fee on my mortgage. Of course, they pre-approved me no problem, then when I had already put a bid in on my house, they told me they couldn't actually give me the conventional mortgage and I'd have to go FHA instead. This means extra inspections and a boatload of extra fees. I applied for a $64k home, was prepared to put $20k down, and the invoice they sent me was for something like $10k of closing costs / fees to organize the loan. No thanks...

If you're renting, you pay more and get less, but you have basically zero responsibility compared to a homeowner. You can move anywhere any time without worry, you're not stuck dumping money into heating/cooling and appliances, and you don't have to worry about the place's resale value or if you're going to want to live there for the next twenty years.

With a home, the PRINCIPAL of your mortgage payment is something you'll get back, you hope. Every other cost associated with the house, like home insurance, utilities, property taxes, mortgage insurance, interest on the mortgage, maintenance, and then all those fun closing cost surprises like title insurance, multiple inspections, processing fees, internet fees, so on and so forth... You'll never see that again, ever. And if you win the game and your starter home that you bought when the market was at a record low has now doubled in value when you go to sell it in ten years... guess what? The bigger, nicer home you're looking to move into has ALSO gone up in value, possibly even more so than your home, and you get to throw away all that money on closing once again.

Not to mention, realtors have zero incentive to help you as a buyer... they won't lowball for you because they want the house to sell to you for as much money as possible.

Cliffs notes: Everyone in the business of buying and selling houses is a conniving motherfucker and I have no idea how they sleep at night. Buying a house was a distinctly displeasurable experience, and I'm not eager to repeat it, ever.

That is such an irresponsible viewpoint, that's the kind of thinking that lead to the market crash in 2007. If you were talking about REIT's, maybe, but you're not investing in "the housing market", you're investing a great deal of your net worth in one single piece of property. On average, over long periods of time, there is generally an upward trend across the entire market, but individual pieces of property can gain value, lose value, or stagnate. Buying a house, from an investing perspective, can be a very risky proposition.

In for graphs comparing the value of real estate in your zip code to the S&P 500 over the last 20 or 30 years.

edit2: I'm not arguing against buying a home if you're ready to stay in one town for the foreseeable future, I'm just saying putting all your eggs in that basket because "real estate value never goes down" is remarkably foolish.

edit3: removed the graphs I found quickly because the real estate graphs I found were inflation-adjusted and the S&P index is not

OP wasn't going to create this thread. But then he said "Oh well, YOLO!" and clicked Submit. :D

I wish we had some type of mathematical and logical way to solve the rent vs buying argument...

http://www.nytimes.com/interactive/2...ator.html?_r=0



[ame="https://www.youtube.com/watch?v=z5Otla5157c"]YOLO (feat. Adam Levine & Kendrick Lamar) - YouTube[/ame]

Haven't seen anyone bring up full ownership cost, such as property tax, repairs/maintenance, interest, utilities difference...

Edit: Err... Like all the stuff in the link. Nvm...

Maybe because it's higher for tax and utilities in Canada, but I've definitely rented for less than people pay in their tax and utilities of an owned house.