Crazy Prices

You may have found median individual income vs household?

 

My point is, inflation is a doubled edge sword. Yes, it sucks to pay more for goods and services, and I agree wages have lagged behind. On the other hand, most people's houses and other assets have appreciated at a greater pace than inflation. Our first house cost us $100K in 1990. That same house is worth north of $1 million today. On average, our savings investments have returned roughly 12-15% annually over the last 30 years. You can't just look at costs versus wages. Net worth is a better gauge. I'm betting your net worth has outpaced inflation. Most people's have.

Matt

 

@Matt2015Tundra

My home has probably more than doubled in value since we purchased it in 2013, and it does in fact add to my net worth. However, unless I am forced to take out a HELOC (which I have zero desire to ever do) that equity isn’t really accessible to spend on whatever new shiny thing my caveman brain thinks is a good idea at the time. So my relative buying power is not really improved unless I want to leverage my house.

A similar observation can be made about my 401K and Roth IRA, yes the average rate of return has been nice. I’ve been lucky enough to be able to contribute 10-15% of my gross income since inception back in 2008, and I have another 15-17 years to go before I will retire. Until I hit 59.5 years old I can’t really do much with it without tax penalties, or borrowing against it… two things I very much do not want to do.

What has increased my relative buying power is a 24% compounded pay raise on our current contract which expires next year. My next raise will be 4.5% in July of 2024, then we’ll get to enter into more negotiations for the next 5 year contract. Hooray!

I’ve been lucky enough for my wages to have kept up with inflation reasonably well and even exceed them a bit on both rate of pay and total hours worked resulting in more $$$. As I gain more and more seniority as a RR engineer I will be able to bid on and obtain higher paying albeit more demanding assignments.

Outside of that income we’re exploring our options for investing real estate for rental purposes, paying cash for said property and trying to accumulate a few of them prior to retirement. We’ve been able to accumulate enough cash, just looking for the right opportunity.

 

This is 100% true. My buying power is more then ever even though the cola has gone through the roof. Also wages aren't as stagnant as some believe. In Cali Leo starting jobs some pay 120k plus, also our gov passed some bill/law that will give fast food employees like 20-22.50 as min wage.

 

It sounds like you have a solid plan to comfortably retire. My wife and I started with nothing, but retired comfortably with enough savings and assists to live the lifestyle we prefer until we die. We were both driven by a desire for a better life, and we made it happen, despite the challenges we faced over 40-plus years of economic cycles. We leveraged a lot of money, when interest rates were next to nothing, and knuckled under when they weren't.

Your rental properties idea is a great one. It's an easy business model to make financial sense out of. If I could do it over again, I would have focused more on that revenue stream.

Matt

 

Yeh your probably right, let me edit my comment, I have no desire to pay 80-90K for a vehicle, and I can well afford it (not trying to be douchey). I just dont see the value. I guess I’d go get a 26K Kia LOL. I drove my 08 Tundra for 15 years, 385K miles and probably could have sold it for 12-14K. Pretty dam good imho. It got totaled and I got 10K for it. But dam I do wish I had that truck back. I just dont care to spend a lot of money on vehicles. Sure wish I kept my dads 89 Porsche 911 Turbo back in 05 ……

 

I hope it works to plan. The rental thing will involve some ass pain I think whether it’s a vacation rental through a property manager or long term rental where there are tenant’s rights etc. Eventually someone is gonna rat-fuck our property and eat into profits etc, but in the long term it will probably be a positive ROI.

On the other hand it’s easier to adjust rents to inflation, or incentivize good remnants to stay by holding rent down a bit under inflation. So there’s an income stream that can be adjusted to inflation, at least that is our hope.

This could give poor performance compared to a mutual fund once time invested is considered, but if represents some diversification and ownership of a tangible asset that is unlikely to ever be worth $0.

 

$120 lol. That's laughable for Cali. I saw a news report that the medium home is $830k. Only 16% of people in Cali can afford to buy. And that 20-22 in Cali is like 10 let's be real. Cali is expensive as hell. Shit all of America is.

 

Yeah brother. Miami people are special. I shit you not, I have a neighbor 2 house down that wants our area to be more like Coral Gables. I was like bitch, then move your ass over there then. Don't nobody want to pay Coral Gables prices around here. The shit you see on the FB or IG page Only in Dade will leave you wondering why.

 

I am on the same retirement boat as you, 59-60 with full pension. I am just a bit closer than you. I work for the public sector and if it's still around will have my retirement through FRS, Florida Retirement System. Only issue I see is health insurance but I could stay on my wife's plan, she's 9 years younger so she can't retire with me. Or I can retire and do the Drop System. Basically I retire and I still keep making my normal salary, plus what ever my retirement pay is, it's put into an account every month till I finally leave. I can do the Drop any where from 1 month to 8 years. Example, if my retirement is $50k a year and I stay 8 years, I get a check for $400k. Obviously I would put it into a account to not get hit at once by uncle Sam.

 

Corporations run the government healthcare and want schools in their portfolio's. They cause increased prices of good and drive taxes not “government”. Record profits year after year. The reason the stock market hasnt adjusted since 2008. The reason the housing market hasn’t adjusted since 2008. The reason gas prices go up. Insurance goes up. Food prices go up. Corporate greed. They lobby, they say they spend to much, they get subsidies from our taxes, taxes go up and they make record profits and pass the double dip to us through inflation. You have cooperations that have gotten around monopolies by simply acquiring business (acquisitions) and keeping the name under their Conglomerate. As long as it isn’t to many of the same types of businesses they can acquire them. If they acquire to many of the same they sale them for 100’s of millions to another conglomerate. Capitalism isnt driving inflation or your taxes

 

you make no sense, nobody works for 1 year and is able to save for a house, unless your buying a mobile home or something

and good luck finding other jobs that give you 120k+ to start with no prior experience required

 

3rd time I edit this. I just can't and won't this time around. Argue with yourself.

 

Whole economy feels like the next bubble to pop. More money in country now but prices on everything are just nuts. I have owned my current home 5 years and houses smaller and plainer than mine are going for 2x. I see listings for $1.2M mountain cabins that sold for $350k in 2019 and they are pending. Vehicles fit into same category. That is why paying over MSRP or spending that $15k for top of line models with a few extra features that don't really matter = buying high like that $1.2m cabin. The higher the purchase price in a bubble situation more money to loose

 

Just when I think 3rd gens are expensive I see this…

https://jackson.craigslist.org/ctd/d/portland-2004-toyota-tundra-owner-89k/7665711968.html

 

I mean, people are paying 100k for a 1/2 ton so why not. Stupid people born everyday.

 

I can't wait for that bubble to burst. As it is those who paid over msrp are screwed. Those that paid msrp aren't as much but still in the hole on a majority of vehicles. I recently got my wife a 23 RDX for $8k off msrp and got it leased for the 1% rule. That's a hell of a deal in today's market but goes to show that it's coming down. Friend at work got a 23 GMC for around $6-7k off msrp also. Financing rate wasn't great though.

 

Hoping for a market collapse...that's a...ummm...interesting perspective.

Matt

 

You mean like the 2007-2008 financial crisis when many ordinary people lost their jobs, houses, life savings, or all 3? Yeah, those were some great times. What's "upside down" is anyone who wishes for those times to repeat.

Matt

 

Yes, if you really want to see the wealth disparity in our country on full display, wish for another market crash and extended recession. That's when wealthy people thrive, as you pointed out.

Similar to you, we went heavily into cash after the Covid rebound, and missed out on fantastic returns in 2021. We haven't had debt for 15 years, so that didn't hurt us too much, but it was still a bad financial move. We've remained heavily weighted in cash ever since then, expecting the correction that all the talking heads on CNBC said was inevitable over a year ago. Whoops. That correction still hasn't happened, and 2023 has been another decent year for stock returns. Another bad move on our part.

Hopefully our ultra conservative financial position pays off eventually.

 

I mean in a capitalist system, it's a dream for those who can take advantage of it. There are no good or bad in a collapse or in this current situation. For me, a bubble bust would hopefully signify a drop in my house taxes and property insurance. A drop in consumer products all round. A wet dream that the government and people will learn from their mistakes but that won't happen since here we are again. And not to sound like a dick but if you know history you would know we are upside down. We fought the British against taxes in the American Revolution yet here we are again being taxed on everything. We the people have come full circle.

 

It’s just the way life is. Everyone will claw and climb and step on one another to get as high as possible until the system collapse and reset.

 

It’s the perspective of a person with over a decade to go before retirement, who is very secure in their career. A big market correction offers a rare opportunity to buy at a deep discount with enough time for the market to recover prior to retirement.

Put me down in this camp, I want to see a big correction in the markets. I survived the last one, and scraped by but took valuable lessons from it while I was furloughed for a year and half from the RR. It was rough but we made it work because I had resisted the temptation to buy a bunch of stupid shit until I had a more solid financial foundation. Found other work and once the RR called me back to service decided to give them another chance.

I want to see who learned lessons and has their shit together and who doesn’t. There’s plenty of time for markets to recover before I retire, and folks within 5 years of that should have moved into safer lower yield investments like bonds. I’d love to buy during a 30% off sale, both in my retirement fund but also property.

 

That's all good for you, but what about folks who are already retired, or on the verge of retiring? A crash and extended recession causes a decline in the values of stocks, bonds, and real estate....you know, all the type of investments most people use for retirement. Even cash isn't risk free in a recession due to insurance limits. Most financial institutions only insure cash up to $250K per individual account, or $500K per joint account, in case the institution goes belly up. Imagine the Silicon Bank failure times 1000.

It's easy to say "I have a secure job" and There’s plenty of time for markets to recover before I retire", but it's rather selfish and cold-hearted, IMO. I know a lot of people who got crushed by the financial crisis, and they never recovered, including retirees who lost virtually everything, and were forced to live in poverty. I saw young families who lost their homes due to predatory bank practices and job losses. Unemployment spiked to over 10% resulting in a higher tax burden for those who remained employed.

I never thought I'd see people wishing for a market crash and recession/depression. I've lived thru the Black Monday, Dotcom, Financial, and Covid crashes. I really don't care to live thru another.

Matt

 

If you’re retired or with 5 years, why in the hell would you be heavily invested in stocks? That is just piss poor planning, and stupid hurts.

A retired person shouldn’t need to worry about real estate values too much. That should all be paid off before retiring right?

For younger people, well a lot of them have made huge mistakes here lately buying shit they can’t really afford. I feel sorry for their kids.

I try to advise my younger colleagues to be more frugal and not take on too much debt, but most don’t listen. They’re going to learn some hard lessons.

 

Please stop with the straw man arguments. I never said a retiree should be heavily invested in stocks. The reality is many retirees do have a certain exposure to stocks, however, even thru other investment products, like annuities and structured notes.

For many retirees, their real-estate is their most valuable assets. They can rent it, borrow against it, do reverse mortgages, or sell and live off the proceeds. A 50% decline in real-estate values can and does hurt a lot of retirees. I'd argue that it hurts any real-estate owner.

I agree, a lot of younger people don't have any clue about economics and finances. That's probably one of biggest failures of our education system. It's on full display with some of the comments here.

Matt

 

Agreed. A much smarter man than I once said "compounding interest is the 8th wonder of the world". Ask a young person about the "rule of 72" and watch the blank look that falls over their face. Many of those same people are the ones who complain about rich people who learned those lessens at a young age.

Ok, I should probably stop my boomer ranting. Did I mention I love the adaptive cruise in my new Tundra?

 

This market is artificially inflated, I do not think it will ever come crashing down nor will prices especially in the housing market come crashing down. I believe since 2008 they have made sure that those events could never happen again. Inject a lot of cash and you have super inflation which is happening now. If you are hoarding cash hoping to buy an off market Capstone Tundra with 2k miles for 40k, it isn't happening. I paid MSRP for my TRDOR Limited but I also sold a truck with 52k miles at an inflated price. So depending on how you look at it, I put down 30k off a brand new Tundra. How much of that is actual money or how much of it is inflated? I would say 12k or so of it was inflated and around 20k plus or minus 2k is actual valued money.