TheHaitian
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Post by TheHaitian on Sept 25, 2020 18:05:57 GMT -5
www.google.com/amp/s/www.wsj.com/amp/articles/covid-unemployment-debt-middle-class-family-finances-11600122791Isn’t that the case for most families: as long as you have a job you are good, till you don’t... then the music stops? The only thing is I just expected for people with Decades in their careers to have a bigger safety net than that. And And in conclusion : My thing is we have known for awhile now things were bad, and for some really bad. Does it only register to some when it starts effecting white collar jobs? And I can criticize the loan-laden too much because I am part of the problem and working on getting out.
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Deleted
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Post by Deleted on Sept 25, 2020 18:13:34 GMT -5
It's been said that it's a recession when your neighbor loses a job; it's a depression when you lose yours.
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thyme4change
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Post by thyme4change on Sept 25, 2020 18:56:15 GMT -5
When you elevate your lifestyle to use up all your income, you have to keep making at least the same income. Not sure how much they were saving, but if it was 20%, and you adjust income tax withholdings on the income you do have, you can make up a fair bit of ground.
I say as I sit here in my palace.....let them eat cake.
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Lizard Queen
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Post by Lizard Queen on Sept 25, 2020 19:06:56 GMT -5
4 car loans and leases? Sorry, can't feel sorry for that couple. The other one, seems like the couple's earnings are on the modest side for NYC cost of living.
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Deleted
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Post by Deleted on Sept 25, 2020 19:20:09 GMT -5
Some things are hard to avoid in a HCOL area. I had a $250K mortgage in NNJ and I'd put $100K down- in 1997. That was the price of living in an area with a decent school system and I had sole physical custody of DS. OTOH, I drive a Japanese model car that I bought in 1991 for over 200,000 miles before I donated it to charity. An Infiniti Q60 is a $50K car- and leased, yet!
The lesson I learned from those years was to be VERY wary of monthly payments, whatever they were. If things wet south, you couldn't cut back on most of them.
And 4 car loans/leases? It's behind a pay wall so I don't know if they took out loans to buy cars for kids (bad idea) or if they each have a "commuter car" and a "fun car".
It was a relief for DH and me to move to a LCOL area. We did NOT buy the max house we could afford and that left plenty to travel and to save for retirement, both of which can be cut without too much pain in a pinch.
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jeffreymo
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Post by jeffreymo on Sept 25, 2020 20:34:55 GMT -5
We had a rough 2018-2019 and were forced to drastically cut expenses. I hope these folks can figure it out like we did. I empathize with those who have come into hard times due to COVID because it was just so unpredictable and sudden. 4 car leases/payments is hard to imagine though. But I can understand how a dual income family might have stretched on some of their debt obligations pre-COVID because the economy seemed to be doing pretty well.
Fortunately for us we learned 2 years prior and weren’t hit with the perfect storm this year. We are now prepared if one of us loses our job.
I don’t think we’ve seen all of the economic fallout from COVID yet so those that are able should re-examine their cost of living. If we read some of these same stories a year from now I don’t think they should have an excuse.
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Sept 25, 2020 20:53:35 GMT -5
You may (or not) remember that the 2008 recession absolutely kicked my ass. That experience caused me to ensure we're now able to take financial hits. Due to stupidity, divorce, and the real estate crash, I have also been loan-laden. It's an asinine choice to make. I wish I'd not chosen to learn that the hard way.
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souldoubt
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Post by souldoubt on Sept 25, 2020 22:17:13 GMT -5
I live in a HCOLA and agree some things are impossible to avoid but car leases and credit card debt don't fall on that list. Using a credit card in an emergency is one thing but if you can't pay your credit card off in full each month then you shouldn't be using it. Some people I know that make comments about their financial situation make poor choices like more house than they need, new to them cars every 3-5 years, RV's/trailers and the list goes on. Like athena said those monthly payments that in some cases may not seem like much at the time can add up real quick especially when someone loses a job or can't work because those payments don't stop coming due.
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wvugurl26
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Post by wvugurl26 on Sept 26, 2020 0:22:25 GMT -5
4 car payments is crazy. And at least one of those is an expensive lease.
The other couple, I doubt $175k goes very far in NYC especially with children. We make more than that and we'd have to make some very different choices in an area like that.
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tcu2003
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Post by tcu2003 on Sept 26, 2020 0:41:35 GMT -5
The other couple, I doubt $175k goes very far in NYC especially with children. We make more than that and we'd have to make some very different choices in an area like that. Yep. I was trying to figure out if the dad worked, because $175k for a lawyer in the NYC area doesn’t seem like much.
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tcu2003
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Post by tcu2003 on Sept 26, 2020 0:41:35 GMT -5
The other couple, I doubt $175k goes very far in NYC especially with children. We make more than that and we'd have to make some very different choices in an area like that. Yep. I was trying to figure out if the dad worked, because $175k for a lawyer in the NYC area doesn’t seem like much.
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tcu2003
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Post by tcu2003 on Sept 26, 2020 0:42:43 GMT -5
And 4 car loans/leases? It's behind a pay wall so I don't know if they took out loans to buy cars for kids (bad idea) or if they each have a "commuter car" and a "fun car". They didn’t explain why they had 4 car loans and leases, just that they had 4.
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buystoys
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Post by buystoys on Sept 26, 2020 7:24:14 GMT -5
It's good until it isn't. Unfortunately, those who made it through 2008 without feeling some pain are feeling it now. I don't think a lot of people learned their lesson in 2008 because they kept their jobs and continued to have decent income. So many people live on the edge and just don't realize it.
I do feel sorry for them having it rubbed in their faces that they made so many mistakes. I hope they all successfully find their way out of their messes.
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mroped
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Post by mroped on Sept 26, 2020 7:35:29 GMT -5
I don’t really understand finances- stock market and such but living expenses/budgets, one would assume that they are basic. Especially when you are talking about people that have a higher level of education like lawyers, doctors etc. if you know that you have children to raise, big mortgages and student loans out of the wazoo then why do you get yourself an $850/month car payement? It’s gotta be that Infinity or Mercedes or nothing? why not go and get a $400/month car? What’s wrong with a Chevy or Honda? My old boss had a saying :”Some people are too smart for their own good!” and in these cases he’s been proven right!
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Deleted
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Post by Deleted on Sept 26, 2020 7:51:50 GMT -5
I don’t really understand finances- stock market and such but living expenses/budgets, one would assume that they are basic. Especially when you are talking about people that have a higher level of education like lawyers, doctors etc. if you know that you have children to raise, big mortgages and student loans out of the wazoo then why do you get yourself an $850/month car payment? It’s gotta be that Infinity or Mercedes or nothing? why not go and get a $400/month car? What’s wrong with a Chevy or Honda? It's not as simple as native intelligence. My Ex was a genius when it came to inorganic chemistry but a financial train wreck. He had to have the best of everything whether he could afford it or not, and sometimes would buy fancy clothes or expensive fishing tackle, stick them in a drawer and never use them. I sold one of his reels on e-Bay for $400 years after we divorced when I decided he wasn't going to ask for the stuff he'd asked me to keep for him. (He never did and he died 10 years ago.) It was largely emotional and it didn't help that he was trying to keep up with his sister, who had founded a hugely successful business with her husband. Some have had bad examples growing up (some people learn from that and others don't). Some are good with numbers and budgets and some don't have that skill. Apparently, based on a post on another Board I'm on, there are people who use the balance reported by the bank to decide if there's enough in their checking account to withdraw money or write a check and then they get angry when an outstanding check gets presented for payment and the account is overdrawn. I couldn't live that way.
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nidena
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Post by nidena on Sept 26, 2020 8:34:28 GMT -5
A friend of mine tries to use formal budgets...I even sent her a copy of my Excel worksheet so she could plug numbers in...but it was too much for her. Her brain, literally, couldn't handle all the numbers that go into a budget. She does better knowing the amounts that she HAS to pay each month and goes from there. Now, obviously, she's not in any job that requires her to use analytical skills in those categories but she at least knows to not bury herself in superfluous debt.
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tractor
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Post by tractor on Sept 26, 2020 9:00:36 GMT -5
I can relate. It sucks seeing your monthly income go so quickly. Both my wife and I are fortunate to have stable jobs, which continue to be in high demand. I have my share of monthly payments, but try to justify it by knowing that I only have three years left on my house and two car payments, then I will have significant breathing room.
If something were to happen (and it might), I have enough in my Roth to kill most of the debt (at least enough that I can flip burgers and cover the remaining living expenses). Will I make it to the end? I have no idea, but it’s easy to get caught with more than you can afford if everything comes crashing down.
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Blonde Granny
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Post by Blonde Granny on Sept 26, 2020 9:15:43 GMT -5
My friends giggle at me and my YNAB budget....but I'm not the one who has to look at their checking account and wonder if there will be enough each year and hope the Lord will provide.
They can laugh all they want, but I never has to wonder. SS and VA disability covers all of my monthly bills and living expenses. Life is good!
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gs11rmb
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Post by gs11rmb on Sept 26, 2020 11:09:13 GMT -5
We have a similar income and the thought of $9,000 in monthly debt payments would make me want to throw up. Even the $4,400 in mortgage and car payments wouldn't allow me to sleep at night.
These are unsettling times and I worry that we don't have enough in savings. We're adequately protected against 'regular' emergencies but long-term job loss would quickly put us in a world of hurt. I need to be more conscious of building up an economic-crisis fund. I know we can technically tap into our Roths without penalty but we view them as retirement funds and not a general savings vehicle.
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Deleted
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Post by Deleted on Sept 26, 2020 11:16:48 GMT -5
This is why I maintain two budgets, live frugally and have underspent for years. I have a normal budget and a job loss budget with anticipated unemployment and timing. As long as I can get a job within a year I shouldn’t have to spend any savings at all.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Sept 26, 2020 11:28:07 GMT -5
I don’t think we’ve seen all of the economic fallout from COVID yet so those that are able should re-examine their cost of living. If we read some of these same stories a year from now I don’t think they should have an excuse. I'm not sure how much any of these cases could accomplish with 12 months lead time. The debt loads are pretty high and I'd think would take quite a few years to really turn things around.
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finnime
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Post by finnime on Sept 26, 2020 11:39:32 GMT -5
I think a lot of people are in the magical thinking stage still of "when things go back to normal" and they'll be alright. Things are not going to go back. Money and public health limitations have reshaped our world. You can spend an emergency fund in an emergency, but then--what? The world has changed.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Sept 26, 2020 11:58:12 GMT -5
I ran into a paywall and couldn't read the article, so thanks for the snippets.
There are times in most people's lives where a sudden job lose or other difficulty can send the spiraling. Wishing all in the article and everywhere safe passage through life's tough spots.
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Deleted
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Post by Deleted on Sept 26, 2020 12:01:48 GMT -5
I think a lot of people are in the magical thinking stage still of "when things go back to normal" and they'll be alright. Things are not going to go back. Money and public health limitations have reshaped our world. You can spend an emergency fund in an emergency, but then--what? The world has changed. I completely agree. I don't think we have any idea yet what's actually going on in the US economy or job market or how bad that could look a year or two from now regardless of the election results. COVID is likely going to keep raging in this country for the foreseeable future even if a vaccine is approved. This must have an effect on jobs and the economy. Experts have been saying since the beginning that the longer we let the pandemic go on unchecked, then the longer it will take for jobs and the economy to recover and the worse it will be. We haven't even started to see the evictions or bankruptcies that will come from this. Or, all the new homeless, jobless, etc...
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Blonde Granny
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Post by Blonde Granny on Sept 26, 2020 12:22:07 GMT -5
This is why I maintain two budgets, live frugally and have underspent for years. I have a normal budget and a job loss budget with anticipated unemployment and timing. As long as I can get a job within a year I shouldn’t have to spend any savings at all. I hate to even tell this one: About 2 years before my DH passed away I did a YNAB budget called "life without Larry". When he died I lost $3700.00 per month of income. My income was going to drop to SS and VA disability. Finding as I adjusted each "normal" category, and determined (a guess) how much gasoline per month, groceries, utilities, etc. I discovered I could live semi comfortably on the adjusted budget. Even today.....it's that budget I use each month.
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Deleted
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Post by Deleted on Sept 26, 2020 13:18:11 GMT -5
I hate to even tell this one: About 2 years before my DH passed away I did a YNAB budget called "life without Larry". When he died I lost $3700.00 per month of income. My income was going to drop to SS and VA disability. I don't know why you hate to mention it- that sounds eminently sensible to me. I know many widows who were left in dire straits after their husband died because SS income dropped by 1/3 and they had no savings and weren't prepared for it.
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stillmovingforward
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Post by stillmovingforward on Sept 26, 2020 13:29:35 GMT -5
My mother had savings and retirement left. Just not enough. I wish they had done a 'Life without Larry' budget before 'downsizing' to their custom built place. Now she lives with me because she can't afford to live on her own (and we don't want to see her in low income senior housing, she's just fine living with us).
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Tiny
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Post by Tiny on Sept 26, 2020 14:52:51 GMT -5
Isn’t that the case for most families: as long as you have a job you are good, till you don’t... then the music stops? My thing is we have known for awhile now things were bad, and for some really bad. Does it only register to some when it starts effecting white collar jobs? And I can criticize the loan-laden too much because I am part of the problem and working on getting out. Yes, I have heard friends say something along the lines of "if you have a job, it's ok to spend money". It seems to imply that if you overspend today (or commit to payments) the next paycheck will arrive and all will be well. I remember early on in the Pandemic shutdown - that I was hearing "it's ok, the economy is great! I'm still working. why is everyone crying about bad times?" which made me scratch my head because they were also complaining loudly about how all their daily/weekly entertainment things were gone - no eating out, no going to the bar, no watching sports, etc. They apparently had nothing to do once all of those public gathering type things went away. I'm guessing they didn't realize a lot of people WORK those jobs and weren't getting paid? Or maybe they thought those jobs were just the kind that people work for "pin money" or that they are the low earning half of a Double Income couple?? Not sure. It did effect white collar jobs - people got furloughed or told to use up vacation. Some employers let people go (when the employer pulled resources from small, not so important projects or put long term projects on hold while they scrambled to figure out what direction to take). Some employers stopped hiring /replacing people (those "low importance" or long term projects that got put on hold? employers cut back on pay (no raises or bonuses or other ways to spend less/conserve $$ or to re allocate $$ to the new hurdles presented by the pandemic). I kind of thought the "Restaurant Apocalypse" was coming (I'm still boggled by how people can eat out 5 or more meals per week EVERY week and still pay all their other bills on an hourly wage...) I figured at some point people would stop eating out so much and that would cause the restaurant Apocalypse. The pandemic seems to have cause the Restaurant Apocalypse. I remember the Great Recession - I weathered it well ONLY because I started getting my finances in order about 18 to 24 months before it hit - because I had a "Existential Money Crisis" and wanted to know where all my money was going and if I was spending it on what I really wanted. So, no raises and less income (no bonuses) for a couple of years wasn't great - but it wasn't very painful. With the pandemic looming in Early February I reviewed my finances (and started stocking up on some household stuff/food stuff/cat stuff) and reviewed my "budget" with the possibility that I might be out of work and what I would do. Thankfully, I still have a job (some cut in income) and am still working towards "early retirement, financial freedom".
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flamingo
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Post by flamingo on Sept 26, 2020 15:31:00 GMT -5
I have a lot of compassion for folks who've lost their jobs during this pandemic. And while I think it's always important to "save for a rainy day", I feel bad that these folks are now in this situation. What I'm struggling with feeling bad about, however, is people who have multiple car leases (and one at $820/month?!) and a $4400 monthly mortgage, when prior to this they were making enough to pay for all of that, instead of saving more for this type of scenario.
Or, maybe everyone in this story had a health e-fund, but now they are finding it's just not enough. Because unlike during "normal" times, jobs are kinda hard to come by right now. I interviewed for 2 jobs this summer, was a final candidate both times, and both times, they company didn't hire me. Not because they hired someone else - no, they didn't hire ANYONE because of hiring freeze's and other things going on at those institutions. Now, in normal times, I just as likely would not have gotten those jobs, but I applied to both in March and I haven't seen another one in my career area, at my level, since.
I'm lucky I still have a job (that's super stable) but if I had lost my job due to the pandemic, with no end to the pandemic in sight, I have no idea what I'd do, 6, 8, 10 months or more out. My e-fund is healthy, I'm married, so we have another income. But even with a budget and living within my means, I can't be without a job for an indeterminate amount of time. And that's what I see as being different about this. As far as I can tell, there is no end in sight to the pandemic and everything it entails.
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Deleted
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Post by Deleted on Sept 26, 2020 15:35:11 GMT -5
In other countries, they pay people so they can maintain their lives. Here in the US we don't. I think that would be really helpful for all of the people who have lost jobs and will end up on the streets. That's just going to make things worse for everyone.
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