Will the monthly payment be the death of us?

[Art G]

From my perspective, the "monthly payment" will bring down the economy. Think about it....

cable bill
internet bill
satellite radio
cell phone bill
day care
car lease
credit card interest

I'm sure I've forgotten quite a few, but consider it. All these things are small monthly expenses that add up to things we'll never own. We talk about the savings of our parents or grandparents and wonder why they were able to do it on such small incomes? They bought things, paid them off, then needed much less income to survive in retirement. What is going to have to happen to save the economy from a surefire broke economy in our senior years? You may think it won't affect you because you've saved, but we can already see the government's involvement with bailing out people. Is Rome about to burn? Even though you've saved, will you be paying for your neighbors retirement?

 

[podey]

credit card interest

Never had any of this...

 

[73ss454]

Well, at 58 I don't need day care and who would lease a car? Credit card interest, what's that?

But hey, I may need long term care.

 

[Art G]

Credit card debt was the beginning to the great fall. Consider the old process of "layaway". You didn't get the item until it was paid in full. Credit cards have created the "get it now" philosophy.
This guy is your culprit...
Frank McNamara (Diners Card) - Wikipedia, the free encyclopedia

 

[tricky88]

I don't disagree with you. These little - and not so little - regularly occurring payments make it harder for people to save, and they are not easy to give up.

I know I pay too much for home internet access and have thought for a long time about switching to a cheaper alternative but I"m worried the service won't be as good and the annoyance of switching all of my email, etc.

I did give up the cable TV bill 6 months ago, and am thrilled to be rid of it. I don't miss TV for an instant. Cel phones - ugh. My wife has one. I don't. I like regularly looking at these recurring things and figuring out which ones can be eliminated or lowered, but I can't imagine most people do that. The fees just keep adding on, month after month, even when we stop getting full value out of the charge, like health club fees or netflix.

 

[ziggy29]

There is some truth to that. Now that the "savings" generation which remembered the Depression are either dead or very elderly, it seems their descendants are forgetting the lessons they warned us about.

 

[ladelfina]

I'd get worried about prop. taxes, too.
Even though values (and thus assessments) should be falling.. I've seen people reporting that (for example) some cities have decided to up assessed values of the underlying land to make up for declines in value of the actual bldg.. Many have already gone from a proportional assessment (like 70%) to 100%.. and some are raising the mil rate into the 20s and 30s!

Sis in an avg. suburban CT house is paying $8k or so: almost $700 month.
Longer-term residents complain their taxes are higher than their mortgage.
AND rates are scheduled to increase a further 6.6% this year!!!
Even w/o further increases.. over the time she plans to stay in the house, she'll have paid more than half-again its value in Prop. tax.

I wonder if people perceive this or not. Are prop. tax payments wrapped into mortgage payments so that people don't see the bills? I never had a conventional mortgage so I got my prop. tax bill directly; don't know how it works for mortgage holders.

 

[Art G]

The American Bankers Assoc. said consumer credit delinquencies in the fourth quarter were at their highest levels in nearly 16 years as borrowers continue to fall behind on auto loans.

 

[ziggy29]

Are prop. tax payments wrapped into mortgage payments so that people don't see the bills?

Yes, if you have an escrow account with your mortgage, your payment will typically include roughly 1/12 of your annual property taxes and 1/12 of your annual homeowners insurance. If you don't, you'll get (and pay) the bills directly.

 

[Art G]

I'd get worried about prop. taxes, too.
Even though values (and thus assessments) should be falling.. I've seen people reporting that (for example) some cities have decided to up assessed values of the underlying land to make up for declines in value of the actual bldg.. Many have already gone from a proportional assessment (like 70%) to 100%.. and some are raising the mil rate into the 20s and 30s!

Sis in an avg. suburban CT house is paying $8k or so: almost $700 month.
Longer-term residents complain their taxes are higher than their mortgage.
AND rates are scheduled to increase a further 6.6% this year!!!
Even w/o further increases.. over the time she plans to stay in the house, she'll have paid more than half-again its value in Prop. tax.

I wonder if people perceive this or not. Are prop. tax payments wrapped into mortgage payments so that people don't see the bills? I never had a conventional mortgage so I got my prop. tax bill directly; don't know how it works for mortgage holders.

Great point! I paid off my house last year, and yet my taxes make it feel like I've achieved very little.

 

[Rivrider]

Don't know if Rome is about to burn, but do agree that all those bills would add up and make it hard for many to save.

Many of us boomers have never learned to do without. Guess I was lucky my parents didn't have a lot of extra money when I grew up.

Of the things you listed, only have internet and cable. Could do without the TV easily enough and go back to dial-up if need be. Cell service is pretty bad on my side of town(had to go outside to use it), otherwise would have given up the landline.

 

[ziggy29]

Could do without the TV easily enough and go back to dial-up if need be.

I'd eat dog food before going back to dial-up Internet.

 

[FinanceDude]

cable bill - DON'T HAVE ONE
internet bill - OK, HAVE THAT........
satellite radio - NOPE.....
cell phone bill - got it, but Verizon still gives me a 22% discount because they don't know I changed employers.
day care - Thank god those days are over.
car lease - Don't do that anymore.......
credit card interest - What's that

 

[Rivrider]

I'd eat dog food before going back to dial-up Internet.

Didn't say I would like to go back to dial-up. Just an example of things I could do without if need be. But, since i LBYM on most things, probably not going to be a problem.

 

[Art G]

Well obviously all here are much smarter than the average American, however, no one has addressed how to handle your neighbor's debt. I read yesterday about the need to raise social security deductions in order to avoid the future shortfall. So, while you all are paying your bills and avoiding those "monthlies", there is little you can do to avoid rising taxes which will affect you in the future.

 

[ziggy29]

Well obviously all here are much smarter than the average American, however, no one has addressed how to handle your neighbor's debt. I read yesterday about the need to raise social security deductions in order to avoid the future shortfall. So, while you all are paying your bills and avoiding those "monthlies", there is little you can do to avoid rising taxes which will affect you in the future.

I think most of us are all too aware, unfortunately, that fiscally responsible individuals are going to be increasingly screwed to bail out the irresponsible in the years and decades ahead.

It's paying less and less to be an ant instead of a grasshopper. And if we allow the grasshoppers to reach "critical mass" to the point where ants aren't any better off because of all that's taken from them, we'll be screwed.

 

[Walt34]

I'd eat dog food before going back to dial-up Internet.

One must keep one's priorities straight!

One of the issues is that there is so much more to buy now than there was in the '30s-'40. PCs (and their software) didn't exist, cable TV didn't exist, few even owned a TV, toys like snowmobiles and all-terrain vehicles didn't exist, residential air conditioning didn't exist, most people got along fine without a car or just one, air travel was for the adventurous and wealthy, and so on.

So, many people apparently just can't distinguish between "wants" and "needs". People in the '30s knew that what they needed was food, clothing and shelter and everything else was "wants".

 

[ladelfina]

Right, Art.. I hope I didn't hijack your thread but I fear the monthly costs we CAN't avoid.. taxes.. basic utilities.. that are outpacing the semi-optional conveniences like internet and cell phone.

Walt, it's true that people have spent on wants. But now the day is coming that they will be up against a wall with needs. Please look at the video lecture I posted on consumption, though.. the visible and apparent excesses may not be as we might think.

 

[eridanus]

One of the issues is that there is so much more to buy now than there was in the '30s-'40. PCs (and their software) didn't exist, cable TV didn't exist, few even owned a TV, toys like snowmobiles and all-terrain vehicles didn't exist, residential air conditioning didn't exist, most people got along fine without a car or just one, air travel was for the adventurous and wealthy, and so on.

But there were cool lamps shaped like a woman's body (made in Italy) back then.

 

[Notmuchlonger]

Im getting tempted to turn off the cable TV in between football season Most of the good shows you can go rent the reason DVD.

 

[Rivrider]

Well obviously all here are much smarter than the average American, however, no one has addressed how to handle your neighbor's debt. I read yesterday about the need to raise social security deductions in order to avoid the future shortfall. So, while you all are paying your bills and avoiding those "monthlies", there is little you can do to avoid rising taxes which will affect you in the future.

I think you're right on this score. Will take a major change in how people think about finances and how they live. Beyond my abilities to figure out how to do that though.

When I grew up, we didn't have a lot of money. But didn't think we were poor because everyone around us was in the same boat.

Now days a lot of folks want it all and they want it now, even if they don't have the money. Then they expect someone else to help them out of the hole they dug for themselves.

 

[W2R]

When hacking at my budget (trying to reduce it), I always start with lowering regular monthly expenses. It's not the occasional microwave, painting, or even plasma TV that causes bank account calamities for me... it's the creeping monthly expenses that seem so small, but add up to so much.

 

[ziggy29]

When hacking at my budget (trying to reduce it), I always start with lowering regular monthly expenses. It's not the occasional microwave, painting, or even plasma TV that causes bank account calamities for me... it's the creeping monthly expenses that seem so small, but add up to so much.

Yep. That's why I try to watch our purchases and expenditures like a hawk. I want to have the constant reminder fresh in my head about how quickly a lot of nickels and dimes become a lot of dollars.

When I make a big ticket purchase, I know we have room in savings to make the purchase. I mentally mark the money as gone before it's spent. But at the end of a month, you realize that your expenses in "miscellaneous" were $500 in a month instead of the $200 you planned on -- and you drill in and you see a lot of $5, $10 and $20 purchases adding up quickly. Truly death by a thousand paper cuts.

 

[Art G]

Yep. That's why I try to watch our purchases and expenditures like a hawk. I want to have the constant reminder fresh in my head about how quickly a lot of nickels and dimes become a lot of dollars.

When I make a big ticket purchase, I know we have room in savings to make the purchase. I mentally mark the money as gone before it's spent. But at the end of a month, you realize that your expenses in "miscellaneous" were $500 in a month instead of the $200 you planned on -- and you drill in and you see a lot of $5, $10 and $20 purchases adding up quickly. Truly death by a thousand paper cuts.

That's what I'm talking about. And they never end.

 

[Art G]

When hacking at my budget (trying to reduce it), I always start with lowering regular monthly expenses. It's not the occasional microwave, painting, or even plasma TV that causes bank account calamities for me... it's the creeping monthly expenses that seem so small, but add up to so much.

Well you've hit on another problem. People don't buy things based on need, they buy on wants. Our parents may have had one TV and one car. Perhaps a stereo and that was about it. They didn't go out and buy a 60" big screen because the 48 inch just wasn't big enough, or because you needed one in each room. They didn't upgrade their kitchens just because they were tired of the old cabinets.
Interestingly, this isn't by any means limited to Americans. I know a woman who went to live in Singapore. She said when they needed new computer equipment or cell phones, they went to the dump. She said they are crazy over there about keeping up with new technology. In fact, things like blu-ray are much bigger over there than in the US.