The Growing Income-Expense Gap

[w¡n9Nµ7 §£@¥€r 123]

Too long to post and too detailed to adequately excerpt... read it for yourself.

http://finance.yahoo.com/columnist/article...happy/11094?p=1

[AnaAndDaniel 0]

what did it say?

Daniel

:energetic:

[one...two...tree 2,762]

That's the third consecutive monthly rise for core inflation, which is running at its fastest rate in 10 years. Costs for housing, medical care, and clothing all showed a significant jump.

The Credit Bubble

With the cost of housing, health care, and other necessities rising, Americans are relying more and more on debt to cover basic expenses.

...

More and more, shelter is straining our budgets: 35 percent of homeowners with a mortgage were paying 30 percent or more of their gross incomes for housing -- up 26.6 percent in 2000, according to a recent Census Bureau report.

This is due largely to soaring home values; the median rose by 32 percent between 2000 and 2005, the report found. (In markets such as Los Angeles and New York, prices rocketed 110.2 percent and 79.1 percent, respectively.)

Meanwhile, that strain will likely grow for homeowners with adjustable-rate mortgages. This year, interest rates are expected to reset on an estimated $400 billion worth of adjustable loans, and $1 trillion worth in 2007, according to the research firm Loan Performance.

...quite a different forecast than what some are painting.

[AnaAndDaniel 0]

yes, but the median couple with the median income is doing better than they were 40 years ago.

Daniel

:energetic:

[Reba 2]

Yesterday at work we were shown a dog and pony about electing our medical benefits for 2007, and in that slide show was a projection that after retirement, Americans will need about $200,000 annually to pay for medical costs. I think this was based on baby boomer projections. Who knows how much it'll cost for us lost Gens and Gen-Xers and so on.

I'm retiring home to Canada I tell ya! I'll never have enough money saved here to pay for medical care after I retire

[one...two...tree 2,762]

Yesterday at work we were shown a dog and pony about electing our medical benefits for 2007, and in that slide show was a projection that after retirement, Americans will need about $200,000 annually to pay for medical costs. I think this was based on baby boomer projections. Who knows how much it'll cost for us lost Gens and Gen-Xers and so on.

I'm retiring home to Canada I tell ya! I'll never have enough money saved here to pay for medical care after I retire

Don't despair, sister Reba...we will have national healthcare in this country eventually.

[AnaAndDaniel 0]

Yesterday at work we were shown a dog and pony about electing our medical benefits for 2007, and in that slide show was a projection that after retirement, Americans will need about $200,000 annually to pay for medical costs. I think this was based on baby boomer projections. Who knows how much it'll cost for us lost Gens and Gen-Xers and so on.

I'm retiring home to Canada I tell ya! I'll never have enough money saved here to pay for medical care after I retire

wow, they don't scare us like that.

but yeah, Ana and I are retiring to Mexico when the time comes. Wam weather is better for me bones. and hopefully medical care down there will still be affordable.

Daniel

:energetic:

[ChristinaM 0]

In fact, Daniel, the median couple with the median income has less disposable income after they've paid their house payments, car payments, insurance payments, and childcare payments than a median couple in the early 1970's - even though the median couple now has two earners but the median couple then only had one.

Housing is a huge deal - the government defines housing costs as excessive when they come to over 30% of takehome pay. That was 34.5% of home owners last year - over one third of this country's homeowners are paying an excessive amount for the roof over their head. On average, people last year spent 21% of their takehome pay on housing, compared to 19% in 1999. Over the same period, the average wage dropped 2.8%; a bigger delta than that of the increase in housing costs! So it's a double whammy - earn less, but pay more for shelter.

Let's look at how it really works, shall we? I can only use my family as an example, because I know where we stand, but I think we're pretty average.

I'm an account executive, my husband works for a software company. We're both professionals. We rent a 2-bedroom apartment in the suburbs of Portland. Our rent alone comes to 32% of our take-home pay - and we have pretty much the deal of the century on rent. Now let's factor in what we pay to keep the lights on and that kind of thing. That's another 8%, right there.

My husband was in school for a while and out of work for a while, so we have student loans to pay and credit card debts from where we used the credit cards to pay for food and gasoline so that I could get to work. Let's call those debts 25% of takehome, because it's close enough. Neither of us have a car payment, thank goodness.

Let's assume that we want to eat across the month too. We'll call that another 20%.

That's 85% of our takehome pay gone, every month! Without even thinking about gas to get to work, a trip to the doctor, or dentist, or if the car insurance comes due.

Many people are living on the edge through no fault of their own. Don't forget that, Daniel.

Edited October 20, 2006 by ChristinaM

[Mirorgate 0]

wow, they don't scare us like that.

but yeah, Ana and I are retiring to Mexico when the time comes. Wam weather is better for me bones. and hopefully medical care down there will still be affordable.

Daniel

:energetic:

Pssstt.. It's cheaper in Ecuador right now.... and they speak spanish there too!

just something to keep in mind

[AnaAndDaniel 0]

wow, they don't scare us like that.

but yeah, Ana and I are retiring to Mexico when the time comes. Wam weather is better for me bones. and hopefully medical care down there will still be affordable.

Daniel

:energetic:

Pssstt.. It's cheaper in Ecuador right now.... and they speak spanish there too!

just something to keep in mind

oohh maybe have homes in both countries and stay where the summer season is in full swing. thus, warm bones all year round. plus, hopefully, still affordable medical care at hand.

excellent idea counselor!

Daniel

:energetic:

[Reba 2]

Let's assume that we want to eat across the month too. We'll call that another 20%.

Kind of greedy of you to have all that and want to eat too innit?

[cmartyn 0]

Barf, And in the US things are worse cause the Kraft Dinner tastes like #######. :-)

[GaryC 7]

Don't despair, sister Reba...we will have national healthcare in this country eventually.

God I hope not!! We would be drowning our kids in taxes and get sub-standard health care. We would be letting the government decide who gets what treatment, we would have to be put on a waiting list for everything and in the end it will end up like every other government program. Bloated with paper work, rife with corruption and total inefficient. Just look at what they did with social security, welfare, the immigration process and any other government program you care to mention. You really want that?

On a personal note, I am not having a problem with an income-expense gap. I have more money today than I ever had. I can afford to support 2 households and still save money. I have very good health care. Life is what you put in it. You can't depend on the government to solve all your problems. Take responsibility for your own future.

[Carol&Marc 0]

Don't despair, sister Reba...we will have national healthcare in this country eventually.

God I hope not!! We would be drowning our kids in taxes and get sub-standard health care. We would be letting the government decide who gets what treatment, we would have to be put on a waiting list for everything and in the end it will end up like every other government program. Bloated with paper work, rife with corruption and total inefficient. Just look at what they did with social security, welfare, the immigration process and any other government program you care to mention. You really want that?

On a personal note, I am not having a problem with an income-expense gap. I have more money today than I ever had. I can afford to support 2 households and still save money. I have very good health care. Life is what you put in it. You can't depend on the government to solve all your problems. Take responsibility for your own future.

So true Gary,I never could understand the reasoning of people who look to the government for goodies, people who dont want to work will get free healthcare and the people that do work will foot the bill, soon it will go backwards and go broke just as social security is doing now! little tip: when searching for a job, check prospective employers benefit package if unsatisfactory? keep looking! Its also not my responsibility to take care of people who come up with every excuse known to man why they cant succeed in this country! the people who founded this country didnt have SH#T, and worked their a$$es off to make it what it is! Cant was a word that was unknown to our forefathers! Heres a dollar go buy yourself a bandaid!

[KarenCee 3]

Yesterday at work we were shown a dog and pony about electing our medical benefits for 2007, and in that slide show was a projection that after retirement, Americans will need about $200,000 annually to pay for medical costs. I think this was based on baby boomer projections. Who knows how much it'll cost for us lost Gens and Gen-Xers and so on.

I'm retiring home to Canada I tell ya! I'll never have enough money saved here to pay for medical care after I retire

Don't despair, sister Reba...we will have national healthcare in this country eventually.

I wonder....

Still, Joel and I want to go home....to Canada. I just spent a week in the hospital (severe asthma) and I had almost everything imaginable done to me. And I wonder if it's because I have such good insurance, yanno? I kept asking why this and why that. Never got a clear answer. Don't get me wrong, I'm glad I was able to get well from this attack, but I just felt a lot of things they did were unnecessary. I work hard for my income and I pay in part for this insurance. Wanting to go home to Canada has nothing to do with wanting freebies and government handouts. Their healthcare system is better. Besides, I have a feeling that when I do qualify for social security benefits (which I've paid into as well as everyone else!) they won't be there for me or for many of my generation.

Just my opinion now, don't go bashing me.

Edited October 21, 2006 by KarenCee