I don't fully follow your numbers. You save 75% of your income — Hanover
I don't know where you got that 75% figure from. Maybe the bit where I said somewhere earlier about only spending a quarter of my income
disposably? Which both you and Carlos seem to have misinterpreted, but differently: I meant that that is the portion of my take-home income which is neither dedicated to fixed costs that I can't reduce (basically rent and bills) nor left over to save. That doesn't mean it's the only money I spend (like you seem to interpret it), nor that that's my free happy fun time party money (like Carlos seemed to interpret it), but that it's the part of my budget that's flexible, in that I could spend more or less on it. It's basically split pretty evenly between food and gas, as I said earlier, and all other non-fixed irregular expenses (like car repair and dental work, etc) make up the negligible rest of it. As I said earlier, my budget is roughly 1/8 food, 1/8 gas, 1/6 bills (mostly medical insurance), 1/4 rent, 1/3 savings toward future housing.
This points to either (1) low income and fear of a high mortgage — Hanover
I have a statistically high income, as I've repeatedly said; I make about the mean income, which is twice the median income, or nearly four times the mode income, and falls at around the 75th percentile of incomes.
I
am afraid of a high mortgage inasmuch as that means spending even more on interest than I am already spending on rent, because at my current rate of savings it's not entirely clear that I will ever be able to save enough to pay off a house, and if I was mortgaging with a higher interest than my current rate, then that rate of "savings" (diverted directly into equity on the house, which is fine since the savings are earmarked for a house anyway) would be even lower and make it pretty much certain that I will never finish paying anything off. In order to avoid that, I need to borrow little enough that the interest does not exceed my current rent, which means paying off a huge portion of the house up front.
Look at the numbers: currently about 25% of my income goes to rent and 33% goes toward eventual equity. If I started mortgaging the cheapest place in the area now, the
interest alone would easily be over 50% of my income, leaving at most about 8% to go toward equity, probably less. Meaning it would take about four times longer to pay something off (which means effectively never as I barely expect to pay anything off in my lifetime as it is now).
(2) unrealistically financially conservative. — Hanover
What is unrealistic? When I complain about this housing issue everyone always says "work harder, work smarter, spend less, budget more". I've spent most of my adult life feeling guilty for not working hard enough, not spending little enough, because of people saying things like that. It wasn't until my current girlfriend (of nearly a decade now) talked me into believing that I could fit things into the budget like a trash can for the bathroom, or a new vacuum cleaner that isn't duct-taped together, that I stopped living like a starving student and working myself to death and decided to actually enjoy life a little bit along the way instead of waiting until I retire to live... and now Carlos is telling me I need to get a side hustle and budget more. So which is it, too conservative or not conservative enough? Should I go back to living off stale bread and water again so I can allocate whatever 10% or so of my income I spend on food toward saving for housing instead, or should I let myself splurge on a place big enough that I can marry and live with my girlfriend at the cost of spending more than half of my income on mortgage interest alone and therefore dying in the street when I'm too old to pay rent anymore?
(3) credit problems — Hanover
I have excellent credit. Well, technically a few points shy of the top "Excellent" category of FICO score, but zero debt, decades of on-time payments, etc.
or (4) residing in a very affluent unaffordable area. You seem to suggest it's 4, but that you're in a trailer suggests otherwise (sorry, but true). What area are you from? — Hanover
As I've said, I'm in Ventura county, California. And yes, I live in a trailer park, because that was the most economical way to get out of renting a bedroom in someone else's house full of ever-changing assholes I had no control over, which is how I lived my entire adult life prior to that. Market rate on a 1br apartment about the size of my trailer runs well over 2X, easily 3X my lot rent here. Because MH lots are rent-controlled, I've managed to keep my costs down close to what they were on the bedroom before, while the cost of even a rented bedroom like I used to live in now easily goes for nearly 2X what I'm paying here.
And this is not a problem restricted to just my "city" (I don't live in a city, I live in unincorporated countryside) nor my county. This is a problem that affects pretty much the entirety of the populated parts of the state. There are
some places where you can buy a plot of land for $1000, but that's for
good reason. Everywhere people actually live and jobs and civilization are found, it's like this. Looking at neighboring states, it doesn't seem much better; my job relocated to Oregon (I telecommute now) and the boss was telling me to move there too because it was so much cheaper, but I looked at the prices and it's really not, and the weather there would leave me an emotional wreck, never mind leaving behind everything else in my life, including the woman I want to marry who would be even more ruined by leaving our home than me.
It might also be 2, based upon your statement that you think the goal of buying is to outright own. The goal of buying is to accumulate equity and hence wealth, as well as to get tax benefits, regardless of whether you eventually pay off the mortgage. — Hanover
That is completely backwards. The point of wealth is to own the things you need so you don't have to pay someone else to borrow them from them. I
am accumulating wealth, much faster than I would be if I was mortgaging a house right now (see the math above), and I am accumulating that toward the goal of eventually getting to stop paying to borrow someone else's land to live on. And I am succeeding at that
far better than a
supermajority of people, and yet still not sure I will ever actually succeed, which tells me that this is not a problem with me, this is a systemic problem.
Look at it this way. It seems to me a fairly reasonable, quite minimal thing to expect that:
-
for any "commutable area" (an area of such a size that a typical person, i.e. a person making about the mode income, could reasonably live on one end of it and work on the other end of it with the kind of transportation affordable to them, which I'd estimate is about a 100 mile diameter with today's technology and infrastructure);
for any such area, ...
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the typical person in that area (meaning again, someone making about the mode income, which the statistics tell me is about the income of a full-time minimum-wage job for the US nationally, though the California minimum wage is significantly higher and yet the
median income is about that of a full-time CA-minimum-wage job, which suggests to me that most people here are under-employed);
such a person ...
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should be able to finish paying off housing sufficient for at least one person (or two if we expect them to have children, which would mean a bathroom, kitchen, an open area like a living room, and one or two closed areas like bedrooms, which means, assuming about 10ftx10ft per room on average, obviously with some variance between them, about 400-500sqft in total);
should be able to pay off such a house ...
-
by the time they could have grown kids (so mid-late 30s to early-mid 40s).
I am about that age. I have always made at least twice that income, and currently make about four times it. I finally own a
structure about that size, but on rented land, and it's uncertain if I will ever be able to afford anything on its own land. My girlfriend is also that age, has always made about that mode income, and owns nothing whatsoever. My parents are 25 years older than us and they both own practically nothing (my mom literally nothing, my dad is complicated but suffice to say he won't leave any estate that I could inherit). Her parents are more like 30-35 years older than us and they just recently, as their grandkids are almost grown, finished paying off something about twice that size (so appropriate for a couple with children). And that situation her parents worked out is an enviable dream to our generation, but yet still pretty unreasonable by any objective standard; they spent basically their entire lives dedicating the bulk of their income just to the task of not owing anybody money for the right to exist somewhere. But they at least succeeded, whereas it's not clear that I, or the 75% of people who are worse off than me, ever will.
And that is a sign that
something somewhere has gone horribly wrong. I have my ideas about what, but arguing for those ideas isn't nearly as important as people just recognizing that
there is a problem in the first place.