Help is on the way

Since you think like me that six benjamins will help yourself more than the economy overall ...










... Wanna go out? ;D

 

Interesting look at how far $100,000 goes in Southern California:
http://www.doctorhousingbubble.com/when-100000-makes-you-go-broke-the-invisible-hand-forces-americans-into-debt/



We’ll go into detail on a few line items. First, I want to show you that the above family is running a deficit of $1,076 per month. Nothing unusual from the above profile. Family bought a modest home in Southern California, has 2 cars, and has many of the items we would associate with middle class living. They also save a modest amount for retirement in their 401(k) and pay taxes unlike Blade. They have additional expenses with healthcare, feel the pinch of higher gasoline, and are seeing their grocery bill increase.

We are assuming that the above family purchased a $385,000 home here in Southern California with a down payment of $35,000. As many of you may know, over the past decade many families bought with zero, 3, or 5 percent down so we are in fact being conservative with the above number. If we were to use a smaller down payment the actual monthly debt would increase. $385,000 does not buy much home in Southern California. In fact, only until 2008 and the ongoing correction in prices, was $385,000 considered chump change and you’d be lucky to get a condo for this price in a safe neighborhood with good schools, something a family with kids would be concerned about. Where did I get this $385,000 number? I simply pulled it out of data from March 2008 sales:

“The median price paid for a Southland home was $385,000 last month, the lowest since $380,000 in April 2004. Last month’s median was down 5.6 percent from February’s $408,000, and down a record 23.8 percent from $505,000 in February 2007. That peak median of $505,000 was reached several times last spring and summer.”

You’ll also notice that prices for Southern California are now back down to April 2004 levels. Of course prices at this point were in a bubble so assuming we are at a bottom is naïve and ignoring the actual foreclosures and trends that we will be seeing for another few years. California property taxes are capped at 1 percent of the assessed value of the home plus local area bonded indebtedness:

 

We're spending half of ours on:

Paying property taxes on our cars (probably in the neighborhood of $500) and paying for another year of a home warranty ($450).

The rest of it ... eh ... not sure.

 

That's one of the things I like about Texas. What you pay for tags is what you pay. About $60 per year, but that's it (the annual inspection sticker is paid separately and is not tied to tags).

In some other states to thye northeast of Texas, you have to jump through multiple hoops to get your tags. You have to pay property taxes on your home and your car, as well as have liability insurance and a current inspection.

 

Stalinism! I am an even prouder Texan upon learning this.

 

(Not a rick-roll, thus allaying Doc's fears.)






(Not this time, anyway. Next time? Yeah, might be a rick-roll.)

 

Current inspection has been dropped, but true in all other regards.

 

I see a few odd things.

Gas bill AND electric bill?

Household maintenance repairs . . . $250 a month? Unless you are counting on prorating replacing the roof in 10 years, seems a little high.

Entertainment . . . $500 a month? And this is not even counting vacations? Hey, rent a DVD and skip the concerts.

And most everything on there can be trimmed by at least 20 percent (spend $175 instead of $225 on "household items" each month, etc.).

And remember, this family is putting away $1,000 per month in a 401(k).

So they aren't really running a deficit. They are breaking even. And with a few trims they can even the ledger and still contribute a few thousand to the 401(k).

$100,000 may not go far in SoCal . . . but it should pay the bills.

 

I'm just glad to see The Invisible Hand is at work again.

Our $1,200 is going straight into our money market account or a mutual fund.

 

Mine and the Future Missus' are going to the honeymoon fund.

 

I wonder what the most effective way to spend the money would be. I highly doubt spending it a local retailer on Chinese-made goods does the trick.

 

Not unusual in some states to have gas and electric lines. Gas might go for the water heater, for example, or the furnace.