The Housing Bubble

Both Bend(population 80k) and Prineville(pop 9k), 30 miles to the east, are selling at $100/sq foot, at least for decent product on the low end.

Prineville used to be a bedroom community for Bend, as Bend got bubbly, P-ville still offered sub 100k housing for awhile. then it followed Bend, new development for thousands of people got abandoned mid-project, After the prices got raised up to $150/sq foot in the bubble; now its no cheaper to move to podunk to own a house closer into town.

Cant end well for Prineville; what with Crook county’s 15+% unemployment. Which is why I just sold my house in Prineville. Cuz I can replace it for the same price 30 miles closer in to where I usually work.

A rising tide lifts all boats; 320k for Palmdale? When was the median there ever close to 100k? 100k for the house is more like it; seems the bottom is close to being in. But I think places like Prineville should fall lower than more convenient, more jobs places like Bend. Just hasn’t happened yet.

But their median income would be closer to 25k, so a fall to 3x income is overdue there, but the investors are propping up the low end. What happens to this low end when the medium to higher end starts pushing down against it; and the pricier defaults come thru the system?

Also yesterday I talked about having kids in mid-childhood and 100k worth of savings. Someone described that as a serious financial situation. Which I agree it is. But how about the 150 million peeps in the country that do not have 2k? How do they send their kids for braces or get crowns on their teeth?
All those costly; monthly surprises, and half our country does not have two nickles to rub together to handle one emergency.

At least I can survive 50 such emergencies (also known as “months” to lucky duckies) before our well runs dry and then we still may have the “Bank of Mom/Dad(thanks to Dad’s EE and moms CalSTRS CA pensions)” for emergencies.
They see us trying to work; and will not see us in the gutter so long as they can help it. but they are neither “down” with my investing in more RE!

b-hampster; yes maybe a niche business in the trade I know would be worth mulling over. A friend offered me cheap greenhouse space to raise mushrooms(underserved product) in if I want to try that. At least I would have a platform to sell them from (a table at farmer’s markets, thanks to this same friend who offered to sell my eventual product)

Also yesterday I talked about having kids in mid-childhood and 100k worth of savings. Someone described that as a serious financial situation. Which I agree it is.

IMO it’s only serious if there isn’t enough money coming in to live off of. Which sounds like the case from your posts.

But how about the 150 million peeps in the country that do not have 2k? How do they send their kids for braces or get crowns on their teeth?

They don’t. And you won’t either if you lose your 100k on an investment gone bad.

I was talking about your terrible income situation, not so much your lack of savings. And even more than your current situation, I am talking about the precariousness of your income situation. You need to get your expenses down and you need to get rid of the temptaion to spend that $100K. There are a lot of programs that will ignore assets if they are in the form of a primary residence, but won’t if they are cash in the bank. You need to be prepared in case your hours get cut (if you lose your certification because you don’t have that master’s degree and a bunch of certified teacher’s get laid off in the area and sign up for subbing, you could end up with no days at all) or your wife loses her job.

You seem very attached to the area because of the kids school situation. If you want to protect that, you need to do all you can to actually protect it.

my wife does not want to move the kids as we have been here over 10 years and like our friends and our kids lifestyles. We moved them around alot during the bubble to and fro from Oregon, and would be crazy to think my wife would let us move to CA. Unless I find some sort of business opportunity that is “golden”. does not sound like housing fits the bill and I have 0 experience investing in anything else.

I appreciate the problem lying with income. Do not the 150 million folks without a cushion also have insufficient incomes?? I know they do, that is why they do not have 2k for expenses. Not saying it matters to me what others make or dont, just sayin it is not pretty if my situation is better than most.

When I had a mortage and rents on my unit were $3500 and the PITI+ was only $2k; that is the kind of investment results I am used to. I know that the environment has changed and now is not the time to plow the money back into housing.

Selling my house got rid of $825/month income. But if my 125k house plunges in value to 60k I will feel at least I made the right choice to get out while I can. Want(but it is unrealistic right now, I get that) the money to work for me, if just a little. How can one use some of the $$ to work for you if you don’t need it all right now. But may need it all over the course of the next decade if the income situation is not rectified.

Even if we blow thru $10k/year and don’t invest, at least we have gotten our kids to adulthood. And we are working on the cutting expenses dealio. Got the kids off of private insurance, and on to state, for instance. So the broken arms and tooth fillings wont be unexpected killers

Just wondering where I fall in the scheme of things, with all the talk of the 1% and then everyone else who also seem to have income problems. Better off than 150 million, worse off than x million?

Want(but it is unrealistic right now, I get that) the money to work for me, if just a little. How can one use some of the $$ to work for you if you don’t need it all right now.

I think most of us are in various versions of that boat. I have a 401(k) that I really wish was growing faster. Normally I would have most of it in much higher growth options. At the rate we’re going I’m going to have a lot less in retirement than I thought I would. But I think at this moment they’re trying to sucker me into a manipulated market…so I wait.

But I think at this moment they’re trying to sucker me into a manipulated market…

That’s the reason why I staged Monday’s mini-intervention with the friend who was so hot to buy a house to rent out. No word on whether she’s still hot to buy, but I did the best I could.

But I think at this moment they’re trying to sucker me into a manipulated market…so I wait.

Same here.

“Just wondering where I fall in the scheme of things, with all the talk of the 1% and then everyone else who also seem to have income problems. Better off than 150 million, worse off than x million?”

Totally irrelevant. Knowing that and $4.85 will get you a cup of coffee. [insert cliched figure of speech here]

You need to protect those kids. Getting them on insurance that isn’t going to go up in smoke if Dad can’t work for a week was a start.

Making that money work for you is for people who actually have a lot of money (you don’t) and people who have safe income (you don’t). Again, use it to reduce the income you need to live comfortably each month. Sounds like that might be a small house to live in. But whatever it is, you need to stop thinking about the money like a shill from a financial seminar or a informercial guy. Think ahansen, not Donald Trump.

polly wrote:

But whatever it is, you need to stop thinking about the money like a shill from a financial seminar or a informercial guy. Think ahansen, not Donald Trump.

Here’s a thought:

“An out-of-town visitor was being shown the wonders of the New York financial district. When the party arrived at the Battery, one of the guides indicated some handsome ships riding at anchor. He said, “Look, those are the bankers’ and brokers’ yachts.” The naive customer asked: “Where are the customers’ yachts?”

__Fred Schwed. Jr., Where Are the Customers’ Yachts? (1940)

Wall Street makes its money selling dreams of fast and easy money to the public.

And how very topical - an article from today’s Bloomberg:

Blankfein has sought to emphasize the firm’s focus on clients after the U.S. Securities and Exchange Commission and a Senate subcommittee accused the company of misleading investors about mortgage-related investments in the run-up to the financial crisis. Arthur Levitt, a former SEC chairman who is now an adviser to Goldman Sachs, said last month that the firm should stop saying it puts customers first “because nobody really puts customers first.”

http://www.bloomberg.com/news/2012-04-25/goldman-s-blankfein-says-he-s-more-optimistic.html

Similar charges are coming down for H$R Block’s subsidiary Option One Mortgage, A.K.A. Sand Canyon Corporation. $28 million settlement.

“Sounds like that may be a small house to live in.”

Sounds like making the money going to work for me in a way I can relate to, that being cheaper living expenses.

been there, income drain related to wife’s girl-surgery meant liquidating the 125k house from 2 years ago.

A Smaller house…..but that is still investing, is it not??
I am thinking that Carl’s trailer park plan is a way to get a lower rent.

Buy a trailer-house for ?? (Have to bone up on that one, given). or a manufactured home on a small lot. Pay space rent of $300; beats $1000. Or smallish prop tax bill.

So Polly, it sounds like another house for cash, if I can swing one for $50-75k ish. But I shall wait a bit first out of caution. Plus investing the money in, gasp, RE, will keep us eligible for kids bennies if there is not a bit o money in the bank, they are up for review in November.(if I did not pay private insurance the last 20 years, I would have lots more money, but I kept them and myself/wife protected best I could as long as I could). So happy the kids get to see the dentist! on the regular even. Not so lucky regarding orthodontia.

Irrelevant? What about the soup line wait time? Gotta know that! What about insurance situations of the folks that don’t have 2k? These pools of folks could have an effect on us as we join the great unwashed uncovered uninsured masses(don’t really wish to wait in a line of 150 million to see a qualified doctor). It is relevant to know the state of the state. Like Rms tellling me about the sewer levee in Los Osos. That option just got lots less desirable/feasible- just cuz I asked-I don’t have that pie and the sky notion anymore! Golly you guys make me want a job!

Wife shuddered when I mentioned trailer park. Howsit working out for you, Carl?

Making that money work for you is for people who actually have a lot of money (you don’t) and people who have safe income (you don’t). Again, use it to reduce the income you need to live comfortably each month. Sounds like that might be a small house to live in. But whatever it is, you need to stop thinking about the money like a shill from a financial seminar or a informercial guy. Think ahansen, not Donald Trump.

No greater truth has ever been written on this blog. Polly, you need airplay because there are millions of people out there need to hear exactly this. The public has been completely bamboozled by the finance lobbys’ lies as it relates to money. They’ve promised the public they’re gonna be rich if they only invest more, work more, give more, do more. It’s such a lie… an insidious, corrupt untruth. Yet I hear so many around me continue to talk in the same way you describe(shill). Others just figure they’re doing something wrong so they go do something else stupid and lose money to the 401k/FIRE Crime Syndicate. These are people who cannot afford to lose anything. They call me and ask…. “I have this money and I don’t know what to do with it”. I tell them EXACTLY what you advised MikeINBend. Their reactions are strange sometimes. They take offense and usually say, “I’m not poor”, “but my ‘retirement’”, etc. They think a few tens of thousands will magically materialize into big money. None of these people know or understand what big trust fund money is. They think 500k or 1 million is the top shelf. They’re completely clueless about the inner circle… the inside. They’ve never seen it, never been near it, don’t understand and it can’t be explained to them. You have to at least have a glimpse of it to grasp. Most have never had that experience.

Wife shuddered when I mentioned trailer park. Howsit working out for you, Carl?

No regrets so far…saw Obama’s helicopters a bunch over the weekend since I’m right next to the airport.

I think about how it wouldn’t work in a lot of places, but it does work for me in this place. Neighbors aren’t scary. Cost is extremely cheap compares to the SFHs only 50 yards away. Climate doesn’t require huge amounts of heat or A/C.

It’s still really “different” though. If you have any insecurities about keeping up with the Jones you have to get over them. As far as “they” are concerned there’s something wrong with you if you’ve gotten off the treadmill and stopped trying to impress them. But it’s kind of fun people people say “Why did you buy a BMW when you live in uhhhh….uhhhh” and you say “that’s why I can afford it” :-).

They’re completely clueless about the inner circle… the inside. They’ve never seen it, never been near it, don’t understand and it can’t be explained to them. You have to at least have a glimpse of it to grasp. Most have never had that experience.

JFK had more than a little experience dealing with the inner circle. After all, he was born and raised in it.

But, when he became President, he wasn’t exactly the 1 percenters’ boy. ISTR reading that during the steel crisis of 1962, JFK said, “My father always told me that all businessmen were sons of [bleep!], but I never believed it until now.”

We lived in a single wide for 7 years or so. Saved a pile of money and life was simple. No excess room means no buying junk to fill up space. Utilities were simple and low cost because everything was electric.

There are those who should be forced to live in a trailer as they need a lesson in humility. A trailer??!!! -gasp!-

We’d go back to it in a heartbeat as our costs to run a SFR are 2.5x the trailer. It was simple, easy and free.

I used to tutor a gal in her college math class at the trailer where she lived. She was of modest means, but a lovely young lady. She was married, and I felt tempted to pursue her, but stuck to my better judgment and did not.

I was always duly impressed by how she turned that trailer into a cozy home, and was always in a good mood despite her lack of material wealth.

“Agressive wallpaper.”

+1 And the aggressive flooring isn’t helping matters either.

“I always thought that you should have at least College Loans
& Auto Loans paid off before you start having children.”

Not saying I disagree with this in principal, but I’m pretty sure the demographic consequences would be very dire. Educated, responsible, professional people would not have kids until rather late in the game… if ever. And would have less kids.

In the meantime, the people who can’t afford to have children or who generally exhibit less responsibility would be practically the one ones having children. Also, the hyper-religious people would continue having children either way.

(Sadly, this doesn’t seem too different than what is happening now in this country.)

Idiocracy

Yep. Idiocracy.

Best ways to change the ratio and encourage educated, responsible people to have children? a) Good public schools with quality teachers and meaningful after-school and summer options, b) Single payer health insurance, c) Colleges that are actually affordable (not just “affordable” because you can take out lots of loans for it), and d) more generous standard deduction for each child raised**

** Should have requirements like the parent must have custody or not be behind on child support or other things like that. However, in the abstract, any way we can support intelligent/responsible/wage-earning people to have more kids is a good thing. If we do nothing, our demographics will continue on the path they are now… and when we’re all old, we’ll be screwed because the idiots will vastly outnumber the normal people

“and he,
had a job, and he,
wore a hoodie, and he,
voted for Obama, so that,
nobody knew– mongoloid he was a mongoloid, happier than you and me…”

You left out the most important things of all: stable employment. i.e. less M&As and offshoring.

Kids aren’t expensive - my 1 year old daughter costs only like $100 a month for food, clothes, and the occasional dr visit. Professional daycare is expensive. $1000 a month. I can’t wait for daycare to be done. If you can ditch your kids with retired inlaws that live close by, then having a kid isn’t that much of a financial burden.

Never will understand why do many people are against birth control.

“Kids aren’t expensive”

Yeah, I remember when my kids were under 5 years old, and I’m thinking “Kids aren’t expensive……”

Yeah, I remember when my kids were under 5 years old, and I’m thinking “Kids aren’t expensive……”

———
Stop this! I want to believe.

The toys get more expensive.

Ditching them, ever, will come back and bite you. Loving inlaws is a great option to supplant your at home care. Ditching, however, is a cringe inducing term. But how else can the kids make it to school age when both parents have to work more than one job or else fall into the(not enough) income trap?

By ‘ditching’ I obviously mean picking them up at the end of the workday, not leaving them until they are 21 while occasionally popping by on holdiays.

Just jibin’ your turn of phrase. Workday? wassat?

Just to be safe, you should start putting away money for college as soon as the baby is born. I wonder if you can start one of thoe 529 accounts even before you have the kid. Then you’d have over 20 years to accumulate the fortunes that you’ll need.

@mightymike - Hard to predict the world 20 yrs from now… but it actually doesn’t make sense to save up money if your kid can get into an Ivy. My alma mater (Princeton) and a couple other top schools (Harvard and Yale for sure, but I think Columbia, MIT, and Stanford now as well) look at whatever the FAFSA says the parent can afford and then they give the student a grant for whatever the parent can’t afford. No loans needed. Many students get full rides. If your parents make under 100k, you most likely will get a full ride or very close. If you make under 200k, your parents probably only pay what a state school costs (15k/yr).

My parents paid something like 50k for Ivy League tuition… but they could’ve easily been forced to pay the whole thing if they had set money aside. Especially because 2 of my brothers went to the Naval Academy and thus cost my parents exactly $0 in tuition. If my parents had a 529 for the 3 of us, it would’ve been emptied. Instead, the school’s endowment paid most of my tuition. And I don’t feel bad for Princeton; the endowment is over a billion dollars and that’s what it’s there to do. And as an alum I contribute back what I can.

The best way to get the maximum aid for one of these schools is to NOT have a lot of money saved in a 529 or otherwise set aside for college. If you have it saved, you’ll be forced to use it. However, if it’s tied up in assets or retirement accounts, they don’t consider that when figuring what you can pay.

So our plan is more likely to be “wait and see”.

The other thing is, educated professionals are having less and less kids due to student loans, tough job markets, and women working outside the home.

At the same time, elite schools have actually *increased* class sizes. My graduating class at Princeton was ~1200 people. Princeton now has over 1500 per class (not sure of exact numbers, but they increased when Meg Whitman gave the money to start a new residential college). Same trend at Harvard, Yale, Penn, etc. So there will be less kids from educated/professional families competing for more spots. It will be easier for our kids to get into a top school than it was for me in the yr 2000.

If the kid doesn’twant to go to a top school, state university is always an option. The one thing I would be heavily opposed to is sending a kid to an expensive non-elite private school (50k/yr+) when they could get a similar or better education at their state university. It makes no sense to me.

One other possibility is that what we now call “college” will be vastly decreased in importance because of advances in online education or else society coming to value KNOWLEDGE more than DEGREES. Very hard to predict the future.

But the one thing I won’t be doing is putting money in a 529. That seems like it’s for suckers.

One more think on my riff against 529’s…

The biggest lessons I’ve learned since becoming an adult are how to flip things around and look at them from the opposite side. 529s are a good example. Who do they really benefit? I truly don’t believe they benefit the average person. There’s just part of the facade that the .0001% and politicians use to make education seem “affordable” or “a smart investment”. The reality is, we shouldn’t need to screw with our tax system or have the government backing up student loans. The fact these policies exist is evidence of a problem, not a solution to that problem.

HBB is a great educational resource precisely because we can work through and point out things the Average Joe doesn’t understand because he takes things at face value or misunderstands them entirely. The average person in our society is barely able to think about the task at hand and has no interest or capability to comprehend the “big picture”.

This is also one of the strongest arguments for sending your kid to a top school. Learning how the 1% (and even the .0001%) think is pretty important to making rational and shrewd decisions. I did not fully appreciate this when I was younger, but want my kids to know this as soon as they are old enough (13? 14?)

I’m not a fan of 529 plans either for the reasons you stated above, but I think they make a lot more sense than “send you kid to a top school”, not that sending them to an Ivy is not a good idea, but that it’s just not realistic for the majority of families. They only let in a few thousand students a year - that’s alot of competition.

Only 10 kids in my entire ISD (out of close to 10,000 seniors) went to an Ivy last year for example. I’m sure my daughter will be smart, but I can’t consider her being that smart (lucky) as my endgame.

I applied and was accepted to an Ivy as well in the ’90s (a close relative taught there, and i was a special situation), but even with the grants it was not affordable for my family’s situation, and my family made nowhere near $100k.

My plan is more simple: Save enough money to send to a state school, and hope she gets special consideration for something better. I just won’t be using a 529 plan as the vehicle for the saving.

Great points. I know most of my classmates got financial aid. My parents paid every penny for my sis and I out of pocket because they could. I saw tuition rise from $300 to $1200 per quarter at UCSB from 1986-1992. I believe that it is over 2k/quarter now.

What will it be in 5 years from now?

My plan is to have my high-testing kids get as much advanced credit as they can in high school; and take some vocational training at HS; and have the school district pay for their first two years getting general education need out of the way. and this route allows for auto-admission to OSU Cascades. I am simply not capable of saving the 100s of thousands to pay my kids way thru college like my parents did for me.

All it did was hurt me anyway; easy come easy go is not good economic training for a child. Even if you are the most frugal parent in the world; your kid may not benefit from endless free money from 18 to 24. When I got my teaching license on my own dime, I was a 4.0 student. I graduated UCSB with a 2.0, and it almost made it impossible to get into grad school for teaching. I saw, hey, I am paying for these lectures, why would I miss them?

I know a hard working family who puts hard work first; leading by example but often working rather than having fun with their kids. Me, on the other hand, got to work as my daughter’s 7th grade teacher last Friday, then in the same hall teaching Special Ed on monday. Then we go home together; attend soccer practice as a family, and I go time my 5th grader on the local track, who wants to run 2 miles ever faster. This is a one-time deal, getting to spend time with your brood. I love spending time on my kids, time I could spend working.

If I had not hurt myself, I would still be working 60 hrs a week, getting hurt and going back to school has increased my daddy time tenfold, a blessing of sorts. So many kids do not have solid family units and they are the hardest to handle at the schoolhouses around town. See it every day, the broken families.

If I kept my nose to the grindstone, diligently saving to pay my adult children’s(5 years from now) way thru college, I would not have seen them grow up like I have been. And I would not know what my kids are up to and that is indispensible for me.

I know the kids who have absentee parents in my sons class, and I don’t like what I am seeing as they suffer thru whatever sacrifices the parents are making for the sake of paying for college. They have an immature junior in HS who has never broken a sweat. I can see him blowing his parents cash in college just like I did. cuz my parents were too busy saving to parent me; I was wild and drugged up by 9th grade.

If this family is like mine they may have mixed results with their three boys. I know they want the best for their kids, but, sacrificing at home time with them may not pay the best dividends. My sis never had a curfew, was valedictorian, and sped thru vet school. I was a 6 year Poli Sci/pre law who barely graduated and would not have but for my parent’s desire for me to have a college degree. That desire skewed their judgement when what I really needed at 18 was a trip to the school of hard knocks. I wasted countless parental resources during my free ride period.

Parent’s example of hard work getting you things may be rejected especially if the child resents no-one being home to raise them in the flesh. I see our friends junior HS boy seem to reject it summarily and is lazy and unmotivated himself. Your children may not appreciate your sacrifices so you may as well sacrifice some time for them and get to know them instead of worrying about the $$ all the time. It may serve them better IMO

Joesmith, I went to one of your listed schools, and my parents didn’t have a large income. However, they had home equity (because they were diligent savers, paying down debt).

I got loans, and the school expected my parents to borrow against the home for some of the costs. Just because you don’t have money in a 529 doesn’t mean schools are going to assume you don’t have other assets–unless of course, the rules have changed.

I have been putting money into 529s from the day my two girls were born, under the theory that 1) I still control the money (it’s mine, not theirs), and 2) I can change beneficiaries later to other relatives–I’m not super keen on passing on $$ to the next generation, but if I can pass on an education, I’ll do what I can.

For people of modest means, my parents made sacrifices to help me get an extremely valuable education, and when I asked how I could repay them, they told me to do the same for my kids. I intend to do so.

Now, if my kids don’t get into an Ivy, so be it…I’m not going to be all that excited about paying Ivy prices for some small liberal arts school…I’ll be pushing for some state schools.

Interestingly, one of the reasons some 1%ers that I know DON’T use a 529 is that what they put into the 529 reduces how much they can gift annually tax free–they are currently using the tax free gifts annually for part of their estate planning.

This is a one-time deal, getting to spend time with your brood. I love spending time on my kids, time I could spend working.

Your recognition of that is something I like about you. Your kids are lucky to have you. Life is a one time deal for all of us. Spend it wisely, I say.

joesmith:

There are a couple of things to consider. Your kid might not get accepted into an Ivy League school. They’re very competitive. What if he or she get accepted to colleges that are one or two half-steps below Ivy League in status? Those colleges are still great colleges, but they generally have much smaller endowments and are a lot less financial aid.

Considering the fact you’re a lawyer and your wife is a teacher accumulating seniority in a district that pays pretty well, the other possibility is that your combined income 20 years from now will be too high to qualify for financial aid.

@Rental Watch — What era did you go to an Ivy? Things have changed a lot in the past decade. H, Y, and P took steps to eliminate loans entirely. Princeton was the first to do this, in the 2002 or 2003 time period. And these schools offer fin aid that goes far beyond what FAFSA says. As I stated, if your family income is below 200k, it is unlikely that an Ivy will cost your parents more than the flagship state university’s in-state tuition.

Of course, the reason for this is not surprising. Most of the students at the very top schools come from affluent families. Median family income for parents of matriculating students is above 200k and the average income is much higher. My dad made about 150k/yr back in 2000 when I was attending and over the years it was sort of obvious that my parents were poors compared to most other students attending. People didn’t talk about it overtly, but over time you get to know people and you realize that in many cases their parents had 8 or 9 figures of assets and generally lived a life that was not possible for me.

I believe it costs something like $60k/yr in total costs to attend an Ivy. Many/most of the students have parents who can afford the full sticker price, so it’s no loss to the university to be very generous with the other kids.

The bigger problem I see these days is that many state universities, rather than spend gifts and endowment money on keeping tuition affordable, they spend it on the athletic department or on building projects around campus.. many of which are unnecessary.

Gave up a high school gig today for the opportunity to work half a day at my kids school. At a lower rate, too.

Since I consider my kids and their exemplary character at school my greatest accomplishment, albeit a work in progress, I will attempt to ingratiate myself at their school.

I am putting butter on the bread. Wife already works there and she is the best darned lunch lady; also the same spot where the school secretary started. Although she hates her department at the district, nutrition, she loves working at the school. The smiles, staff that appreciates your volunteering to to recess duty on your split, that loyalty is going to help her. If not at least there was a parent present for our kids K-8 years.

It is only the last few months that I have attempted to work at our community school. I had a few issues with the sitting principal, but she is leaving this year for greener pastures in Brazil. Investing in our community hopefully will pay some additional dividends in the form of more work(at their school).

MightyMike–this is true, we may have too much income to get the really good fin aid packages. So much could change between now and then.

So many things could change between now and then. A lot of the things I learned from going through the college fin aid process will probably change. Possibly everything will change by the time my kids do it. So I guess much of what I said above really applies to people with kids in elementary or middle school right now. Basically, I’d find ways to save without using a 529. And I think college costs are significant enough and the potential savings from getting a good financial aid package at an Ivy make it worth looking into.

The other thing I pointed out is, simple demographics combined with enlarged capacity at Ivy schools means that it will be easier for kids to get into an Ivy in 2030 than it was in 2000. Unless we start importing Chinese kids whose parents will pay full sticker price (I’m not sure how many Chinese kids would be admitted, much less how many have parents who could shell out $250k). So it should get easier to get into an Ivy. The toughest period to get into an Ivy was late 90s until 2010. Right now there are less high school seniors who have the background and the number is going to start decreasing each yr for the foreseeable future. Until more educated and responsible parents start having larger families.

“I had a few issues with the sitting principal, but she is leaving this year for greener pastures in Brazil.”

How much do principals make in your neck of the woods? Close to 100K? She’ll have a very hard time making that kind of scratch as an educator in Brazil.

They make 100k. but most staff don’t like her, she divorced last year, her senior in high school came out last year.

She just wants some space, methinks. It is also a sabbatical so she can come back; greener pastures only in the personal sense, not financial I assume. I know she is going to work as an administrator. Noone I know has bothered to ask her much more. Mostly a collective sigh of relief as this administrator did not deal with problems well (Isn’t that their job?).

Only one caustic teacher likes her outwardly at this point. This is the teacher I took issue with when my son was in her class; principal called me to go to bat for her teacher; thus the tense relationship.

Note to self: get along with the new principal!

joesmith–my 15 year reunion is this year, so I was mid-90’s. At that time I got the very cool benefit of having some science scholarships cut my Clinton, my parents equity being counted toward their means, and my loan interest rates at 5%, 7.5%, and 10.5%. Of course, I think my total sticker price was half of today’s number…wow. Never-the-less, I drove some pretty crappy cars and lived in pretty crappy places until that debt was repaid in full. My wife and I both did the same thing…paid off all student loan debt quickly…of course she had law school debt, which was a bit bigger…paid back long ago though.

Good grief, Joe. Your family should already be pulling down around $200K a year, possibly more. Your kids won’t be at the top of the scale, but your future kid(s) are not going to qualify for the sort of financial aid you are thinking about.

@ polly — 200k is below median for parents of Ivy students. And HYP don’t expect parents with 200k pre-tax income to have $60k to pay for tuition. People at that level get *hefty* financial aid packages.

This change was mainly a way for H,Y, and P to stay at the very top of the rankings and distinguish themselves further from the other Ivies and places like MIT/Duke/Stanford/Johns Hopkins.

As I said before, even before the financial aid at top schools became more generous, my parents paid something like 12-15k/yr even though my dad’s income was about $150k/yr. And that was 12 yrs ago now.

If your kid can get into an Ivy, there really isnt a good financial reason you can’t go. The other thing is, if they’ve admitted you, they really want you to accept the offer so they have a high “yield rate”, which is another thing the top schools compete over. Out of admitted students, how many accept the offer?

Best way to juice the yield rate is to throw some extra grants in the picture. When I was deciding between Y and P, Y was offering a couple thousand more in grants. We faxed the offer to P and they sent out a new offer to match Y’s offer.

The bottom line is, unless you are truly wealthy (at which point you can really afford the tuition), you will get a lot of aid at Ivy schools. And $200k pre-tax parental income is below median and far, far below average among Ivy parents. Lastly, income is a poor proxy for assets… even if I make 200k/yr for the next 20 yrs, how much will I have in assets? Not much compared to true fat cats.

I’m sure you realize this–compared to colleagues who are in investment banking or are partners at Vault-rated firms, your income is paltry and your assets minimal. I’ve realized that unless something big happens for me, I’m just not going to be one of the wealthier lawyers out there. And I’m OK with it. So yes, my kids would get financial aid at an Ivy.

From 2009
…………………….

“Today, 63 percent of Harvard students receive scholarship assistance, up from 40 percent three decades ago. Those from families making less than $60,000 a year get a virtually free ride; such students account for nearly a fifth of Harvard’s undergraduates, an increase of 30 percent from five years ago.”

1/2 of Harvard admissions are reserved for legacies.

Sorry, Joe, but I think you are going to be very disappointed. Some help? Yeah, maybe. But not what you are thinkging. Besides, your expenses over the next 20 years are going to be fairly low. You just bought a house for less than $150K. You and your wife both work and I stand by my guess that your family income is close to $200K now. You plan on only having one moderate car. You plan on having only one child. You plan on sending that child to public schools. You both probably have student loans of some kind left, but as near as I can tell, that is your only big expense.

Making/having less than an investment banker doesn’t get your child grants to go Ivy. Real financial need does.

Princeton has a financial aid estimator on its site (did you even check?). I guessed at an income of 280,000 (80K for your wife, 200K for you). That you have only a primary residence. That you have 100K of cash and equivalents and $600K of investments. That the child has $20K (cash and investment) and works an after school job making $2000 a year. And that the older parent was 55. Not investment banker/hedge fund money by any stretch. The estimator says you wouldn’t qualify for any aid at all.

Why don’t you play around with the financial aid estimator and report back to us.

Here is the link:

http://www.princeton.edu/admission/financialaid/estimator/

Everyone else can have some fun too. I might go back and see how low I have to make the income to get any aid at all. They are basing it on total costs of about $55,000 a year.

Cool Polly!
I just played around with it using current numbers (less than $100k family income, less than $100k in total assets required on the site not including retirement), and I owe a bit less than 40% of the yearly tuition:

II. Your Estimated Family Contribution
Parents’ Contribution $20,300
Student’s Expected Summer Savings 1,530
Student’s Asset Contribution 0
——
Total Estimated Family Contribution $21,830

III. Your Estimated Aid Package is $33,850
Grant Funds $30,950 + Campus Job 2,900
——
Total Estimated Aid $33,850

People get in real trouble when they make assumptions without doing the needed research. It is a particularly bad trait in a lawyer. I’m sure you noted that they did not ask for equity for the primary residence.

“The best way to get the maximum aid for one of these schools is to NOT have a lot of money saved in a 529 or otherwise set aside for college. If you have it saved, you’ll be forced to use it.”

Great perspective. Anyone else have comments on this?

College educations are like homes. Everyone thinks they need to get one but don’t really know why. It seems like all common sense goes out the window with these two major purchases in particular. There are ways to buy both houses and a college education without destroying yourself financially but no one can figure that out. Very strange…

“The best way to get the maximum aid for one of these schools is to NOT have a lot of money saved in a 529 or otherwise set aside for college. If you have it saved, you’ll be forced to use it.”

——————-
Great perspective. Anyone else have comments on this?
——————–
That might work, but if you have the means to save money for your children to go to school it seems kind of selfish to not do so and save that grants for the intelligent but actually financially disadvantaged. That’s a moral complaint of the strategy though not a financial one.

You are also putting your future in the hands of some grants controlled by people who can easily change their minds about who gets them or might have to limit them to circumstances beyond your control.

The grants also don’t include any daily spending money.
I guess it just depends on your risk tolerance.

Polly, if you read the entire exchange I stated that my plan is to *wait and see*. When we have a child, we still won’t know. I expect big changes in the coming decades… the current rate of increases in college costs is not sustainable. Morever, *you* made some hefty assumptions. Yes, we bought a house for $150k, but our combined income until for 2011 was just 130k. I just got a new job, so that is going to increase. I was laid off from a Vault10 firm in 2009 and moved to Maryland to be with my fiance near her family. At one point I did indeed make 200k/yr, but those jobs do not exist in Baltimore. Until the new job I was making 75k and she was at 55k, although she’s getting a salary bump now too, to 60k.

Eventually, I agree, we will make 200k+, but here are some other assumptions you missed–a) you assume I’ll be a w-2 worker during my 30s, 40s, and 50s. That seems unlikely to me. b) You assume that I’ll be *showing* 200k in income, rather than using a partnership or corporation. As you know, there are ways to lock up money that will make income appear smaller. c) You assume that when my child is 12 or 13 I won’t start planning for the college and start looking at estimators and formulas. This will enable college planning with an eye towards arranging assets and structuring income. d) You assume that schools like Harvard and Princeton won’t just keep increasing their financial aid to compete for student quality and yield. That seems unlikely to me. Schools like H Y and P don’t need undergrad tuition at all; it’s a drop in the bucket. And they have plenty of prospective students that can pay full price and write big donation checks on top of it.

The other possibility is that I do really well in future endeavors and all of this is unnecessary. This remains to be seen. I’m not going to *assume* that I’ll average 300k+ over the next 20 yrs. Now that would be silly.

Committing tax fraud is not a good financial plan going forward. If you have a kid, start saving for college.

And nothing that I wrote assumed that you would make over $300K per year on average going forward. Just that by the time you are in your early to mid-50’s that is what your wife (a teacher with over 20 years experience) and you (an attorney with a decent background) will be showing on the FAFSA.

You need to spend some real quality time with that financial aid estimator.

And I just ran it with the following:
Mom income $70K
Dad income $100K
parents assets $50K cash and $300K investments
students assets $5000 and $2000 income (summer job)
Older parent’s age 52

Total expected family contribution is over $48K per year on those facts. They’ll get you an on campus job for $29000 and a scholarship of $3800 (yes that is less than $4000).

And while they don’t ask for the value of your primary residence, they do ask for the value of any business your parents have. Sounds like any money “invested” in a law practice is considered an asset.

Of course.

Yeah, my BMW is making decent power but is still slower than my Mitsubishi was. Because it’s 600 pounds(!) heavier.

Anyone notice that today’s Civics are as big as Accords were 10+ years ago?

Yup. And the Accords are huge. They never shrink so my guess is that the Accord name will eventually go away when we go through a phase where nobody wants to spend that much for that much size.

Notice how “slab sided” all new cars look?

That’s the mandated side impact standards starting around 2005.

The doors/sides are higher, because they test using an SUV (with it’s high bumper) along with the run-of-the-mill car. The side protection system/structure extends 4-6 inches higher than it used to. In fact, all of the impact standards have been increased, to take into account all of the trucks/SUVs on the road. All that extra steel is heavy, and costs money to buy, and to haul around.

(Don’t forget to thank your pickup/SUV owning neighbor for this, the next time you see him)

And while the NHTSA is mandating higher crash standards, the EPA is mandating significantly higher CAFE standards, using tougher/more realistic tests.

The $50,000 Honda Civic is closer than you think.

The big question is, how many people are going to be forced to hoof it, when nobody can afford cars? What does that do to state highway budgets, when gas tax receipts start dropping?

A cynic like me would suggest that this was the plan all along. Let the wretched refuse pay for the road/highway system, then price them out, so the 1%ers don’t have to deal with the riff-raff on their evening commute.

Works even better, when you realize that the inability to get around will finish flushing the wretched refuse out of Flyover Country, leaving the 1% in firm control of all of those nice Senators from the Plains states.

Look for the proliferation of “company cars”.

Fort Worth is all excited about the new toll lanes they will soon be building on I-35W.

The $50,000 Honda Civic is closer than you think.

The big question is, how many people are going to be forced to hoof it, when nobody can afford cars?

We might see the emergence of a cottage industry to keep “vintage” cars on the road for decades, like they do in Cuba.

I’ve taken long-distance Amtrak trains in the eastern and western U.S. And I’ve taken Acela/Metroliner in the Northeast Corridor.

I don’t recall any major problems with any of them. OTOH, the Canadian national railway train that I rode had a chef on board. (Hint-hint, Amtrak!)

Only BJ can confirm or deny.

In a normal world, mosquitos and other parasites get swatted down hard………. because they’re a nuisance.

“The mosquito seeks out its prey and then sucks its blood because … it is a mosquito.”

When my brother was in his teens and early twenties he was naturally cut. He would let a mosquito bite his forearm and flex, once the mosquito started sucking blood it was stuck, couldn`t get loose, couldn`t stop sucking bood and it would just pop. It would be pretty cool if you could do that to a Realtor huh.

Marginal buyers, meet default. It’s your future.

RAP (Parasites)
We’re a cash & close. Those FHA buyers are our competition. I hope you weren’t addressing us a marginal buyers or future defaulters. We’re buying our toetag home.

No mam I was not. I know your situation and always look forward to your posts….. I love on the ground reports. Keep posting them. I was speaking to your reference to marginal buyers.

RAP
Good to hear. I would love to have the morals of a maggot and be a freeloader. Unfortunately, I’m made from better fiber. Parasites fit the whole industry, imho.

All
Two new listings this week in our price range, but one was the fishbowl yard house at $380K, and today a two-story (interior knock out beauty) with a pool/spa for $425K. The $440K-$450K price range is being pulled down in price due to no movement of inventory. Agents are getting a clue buyers will not over,over pay. But still, in 2002 these homes went out at $275K and incomes were a lot stronger. I am just so fed up. (So Ca - Ventura County)

Oh, I wanted to add. Talked to an agent today. She told me that sellers (thing listing agent) are collecting and holding offers for a few days, and countering the strong ones, with hopes of getting over list. She said her FHA buyers are going up to $25K over list and losing out to stronger buyers. Lenders may not go along with the scheme, and they don’t want the house back on the market as a re-list or a long DOM. There might be more than a grain of truth in her comment, since she really likes and respects me. I’m older and worked for a REIT. Nice gal (28yo), but has no business selling homes. She said she married well, and is having babies soon. Biggest purchase in your life, and look who people hire.

A classic episode for sure.

My name is not Joe Smith… I should probably come up with something more original…

A friend once lived in Show Low, Arizona. She was in a trailer park, and the trailer needed work.

So, she spoke to a Mormon guy and he said he’d do that work. Okey-dokey, thought my friend.

Friend’s job was in Cibecue, which is out on the Apache rez. She really had to haul you-know-what to get back to Show Low so she could meet this guy at the trailer.

But he never showed up, even when she asked him to do so more than once.

Some time later, she shared this story with a fellow she knew. Guy was Mormon, and he explained that the repair guy wasn’t going to do the work because my friend wasn’t/isn’t Mormon.

The fellow told my friend that he didn’t think that the repair guy’s behavior was proper. But there it was.

“…we are non-joiners…”

You’re my brother from another mother, bro’!

Maybe we should form the religious order of non-joiners?

He wasn’t scared - he figured out how to buy the votes of the people he bribed with government money.

And it has been working ever since…

LBJ is often credited with being progressive by strengthening civil right, but the fact of the matter was, he was scared and so was everyone else.

There was also that little thing about an assassination…

Banana…… The Barackness Monster is gonna get ya. Hide yer guns.

LBJ is often credited with being progressive by strengthening civil right, but the fact of the matter was, he was scared and so was everyone else.

When Washington, DC erupted in riots, the smoke from the fires got into the White House. Where everyone, including LBJ, got a good dose of it.

I’m sure that made quite an impression.

Big daddy leather bear Sean Hannity will protect him from the scary kenyan indonesian muslim communist dogmeat eating voodoo witchdoctor boogeyman

Is Sean Hannity frequenting gay bath houses in Philly?

No, but Hannity will be the keynote speaker at C.L.A.W. this weekend

http://clawinfo.org/

LBJ is often credited with being progressive by strengthening civil right, but the fact of the matter was, he was scared and so was everyone else.

LBJ was Dem from Texas but as racist as they came and didn’t scare easily.

The facts don’t bear that out. LBJ’s first major civil rights accomplishment was to shepherd the Civil Rights Act of 1957 through the Senate, where southern segregationinsts had disproportionate influence. This was long before the riots of the 1960s. From what I’ve read, he was significantly less racist than the typical white rural Texan of his generation.

Of course, it’s possible that he was mostly trying to impress the liberals who dominated his party. In any case, you need to keep in mind the influence of the civil right movement. It was really the success of that movement that allowed LBJ to be successful in his quest to end segregation.

LBJ was not a racist by any means.

Read up on Operation Texas.

In the late 1930’s LBJ, while already in Congress helped run a program to covertly smuggle Jews out of Natzi Germany and into Texas.

This probably would have killed his career if this was made public in the 1930’s.

“The Forum is an annual summer gathering at our signature “Aspen Meadows” campus in Colorado of top-level present and former government officials from all relevant homeland security/counterterrorism agencies (the White House; Departments of Homeland Security, Defense, State, Justice, and Treasury; the intelligence community; and Congress); industry leaders (large and small homeland security/counterterrorism-related companies, as well as private equity investors, merchant and investment bankers, venture capitalists, and other financiers); leading thinkers (in other think tanks and academe); nationally noted print and broadcast journalists; and concerned citizens. During three days of in-depth conversation, participants explore various aspects of aviation security; maritime security; border security; mass transit security; critical infrastructure protection; “soft targets” security; cyber-security; intelligence; counterterrorism strategy; terrorism finance; and more.”

“Two years? Try 4.”

“We’ve hit bottom.”

“Analysts at the online real estate database Zillow are declaring just that”

Zillow elevator music.

The Doors - Been down so long

Well, I’ve been down so Goddamn long
That it looks like up to me
Well, I’ve been down so very damn long
That it looks like up to me
Yeah, why don’t one you people
C’mon and set me free

I was simply harkening back to the peak non-current loans that were hit 2 years ago. Of course there are loans that have been non-current for far longer.

It’s complicated. I’m sort of his superior and he is a pillar in the community.

Reservoir Dogs kinda thing.