Renting has it’s downside…Market info…and more!
This week we are looking at the buy vs. rent debate from different angles. We have looked at the ownership costs versus the rental costs if you were to make the decision TODAY. I think it makes renting look like a good deal at this time, in your high priced ‘bubble’ areas.
But what are the downsides to renting? I know that many people have experienced bad landlords. Some of these people never made repairs, were pains to deal with, or worse, lost the property with ‘you’ renting it. I know that there are some horror stories out there, but do they outweight the economic costs we looked at earlier this week? I have had mostly good experiences from renting, so I am going to look to the readers to share some ‘horror’ stories here. I have excellent credit, I have never had a problem making deposits, and I have been lucky to find good situations with good landlords. I did have a situation a few years ago where I had to move out in a weekend, but all in all, I have not had any problems renting.
I know that having to move and not feeling ’secure’ is probably the biggest drag on renting. My advice is to sign year long leases with landlords that you have ‘interviewed’, or find good apartment complexes that are not going anywhere, or plan to be converted to condos. I know that moving is even more of a pain when you have kids and family. But is the pain of possibly having to move a time or two worth the monetary saving by renting in high priced areas? I think it is. I would have to pay over 2x my rent to buy my place with an interest only mortgage. I’d rather rent from my landlord, pay half as much, and not have a huge mortgage hanging over my head…than ‘rent’ from the bank and the government with an interest only loan and $500 a month property taxes. I know most people just focus on the monthly payment, but you have to look at the amount of debt you are taking on as well. Is it really worth spending 3-4k a month to ‘own’ that condo that you can rent for $1400? Only you can make this decision for yourself, I’m just telling you what I think at this point in time.
I want to share this information from a reader. Some of you might have read it already, but I think it is worth reading again. I know I have read it several times, and I can’t help but think that families like this are not alone. Let’s see how they handled their buy vs. rent situation in a high cost area, WITH children.
—–I have one of those perfect families, and wanted to share my story. Despite my husband’s very good salary, we lived paycheck to paycheck, due to the high cost of housing in San Diego. We finally sold our house, to cash out at the top. Now we rent for a little less money, and paid off all those credit cards that we used to pay for car repairs, property taxes, and other “unexpected” expenses.
When we moved to San Diego from Arizona in 1999, we almost couldn’t afford a home. We stretched to get a 30-yr mortgage, buying one of the cheapest houses in a suburb of San Diego desirable for its good schools. In Arizona, we had a 15 yr mortgage, because we chose to buy a cheaper house than what we qualified for, so we could have a house paid off when hubby retires. That prudent financial plan was shot when we arrived here. To get into the school district we wanted (and no, it’s not on the coast either), we needed to get a 30 yr mortgage, and stretch into the payments.
At that time, PITI was 30% of gross income, and I think that was pretty high. Basically, after the 401K contribution and taxes taken from the paycheck, the first payment of the month covered the mortgage and groceries for 2 weeks. That left the other paycheck to cover the other 2 weeks of groceries, gas ($300/month), kids’ activities ($700- $900) , a car payment, life insurance, car repairs, home maintenance, clothing, etc. Needless to say, every time the car broke down, it went on the credit card. Every time the annual property tax bill came due, it went on credit.
And forget about vacations - we just couldn’t afford them. We did not use credit to spend on vacations, a new car. We bought used cars, and had one paid off. Although we took a few vacations over the last couple years, it was done on credit. There was no way we could save up for that.
And remember, we were only spending 30% of our income on a mortgage.
What about the people spending even more than that, the ones having to go no doc just to qualify? How are they paying for it?
It is popularly reported that US consumers don’t save because they are spending their home equity, so they don’t need to save. True. BUT: the bigger reason they don’t save is the HIGH mortgage payment. They can’t afford to save.
And when an unexpected expense arises, take it out of your house. You need to tap your equity just to pay the bills these days!
And to those of you who post with your stories of how much you save, how you never buy anything on credit, I ask you this: 1. Do you have any kids, and if so, do you offer them opportunities for piano lessons, gymnastics, soccer, tutoring? Not all of those, of course, but at least one or 2 activities per kid. 2. Do you live in a high-rent or cheap-rent part of the country? Is it possible for you to pay less than $2K/month to rent?
If you are a good parent and provide after-school activities, plus care about their education and therefore move to a part of town w/ a good school (which costs more), plus you live in a high-cost-of-living area in the country, AND you are debt free, then I am impressed. If you are debt free because you don’t have kids to raise, or you live in Wyoming (where you can rent a house for $800/month), then you don’t have bragging rights.
I am sharing this personal information only to show how a typical American middle-income family, w/ young children, has had to struggle financially, even though we bought a house 6 years ago, before the bubble was so big. No one in our situation could be expected to save much. Those who bought after we did, are much worse off. My husband makes money in the top 10%, and it hasn’t been easy for us. How much harder is it for people with less income, who bought in the last few years?
I would love to hear more stories from people who are honest as I was, who can say “I was in over my head too because of these high housing prices”.—–
So there you have it. An honest and straightforward explanation of one family’s decision to rent vs. buy at this time. You can read more about this readers situation here.
Let’s look at some market conditions right now.
Before I get to the loan side of things, I’d like to point out that there are 16,397 properties for sale in San Diego (maybe more or less when you check). When I checked earlier in the day it was at 16,352. Remember that just 2 weeks ago the inventory stood at 15,568. Ok…onto the loans.
As you can imagine, there is nothing groundbreaking going on out there in the industry right now. I knew that things were going to slow down going into the holidays, and I figured it would be the March timeframe until things picked up noticebly. It seems that more people are ‘testing’ the waters, but not liking the temperature. More people are seeing the rates, and instead of refinancing early, they are waiting until pre-pay penalties expire. Things are still pretty slow on the subprime side, and I see that continuing for another few weeks at least. A-paper is still clicking along, with some of my offices doing 80% of their business with the option-ARM.
That said, I’m sure most of you can tell that I see the writing on the wall. Hence the extra work going into this blog and working on getting the consulting page where I want it. I’m not going to be one of those people that just ‘hopes’ it will be 2003 again…or that thinks will ‘take off’ again during the spring. I read the data, I know what I have seen, and I have my opinions on what I think is going to happen. That is why I believe in having a contingency plan. Waiting until the subprime industry hits a major speed bump, is not the time to go ‘what happened?’ and try to figure out what to do. I’m sure things will pick up some, but nothing like past years. Even the media is starting to discuss many of the crazy loans that are largely responsible for the boom in the mortgage industry. Once the domino’s start falling, I have a hard time believing that subprime will continue to exist as it has the past few years. It will always ‘be there’, but the rates will be higher as investors will DEMAND a high risk premium again. Once the ’stated income tsunami’ washes ashore and makes people look like fools for giving Wal-Mart greeters 400k loans, look for some changes in the industry. I could be wrong, only time will tell. Either way, it never hurts to have a back-up plan.
I want to take a moment here and get serious. I have some startling information to share with you. I was passed this ’secret’ info by a reader and I want everybody to take 3 minutes out of their day and watch this educational video clip titled DEBT. Just click on the link that says “watch an ad to view the site for FREE” and you won’t have to register or anything. There is some startling information in there. Sometimes the things that sound so simple are the hardest to understand. Let me know what you think.
Keep the comments and feedback coming! Don’t forget that there is a lot of activity going on in the forums!
SoCalMtgGuy
February 8th, 2006 03:51
My parents rented while I was growing up and we moved around alot. So the negative is that there is no one building I can call home. I’ve rented most of my adult life and I can’t say I had any really bad experiences (both apartments and rental homes) — once we moved out because the apartment upstairs was too noisy (we complained and wrote letters and we finally ending up breaking our lease, without any penalty). Renting a house in a decent neighborhood makes it less likely to have noise problems (we now have a greenbelt in the back so noise problems there).
On the plus side, moving forces you to dump junk (or lean in the first place) so the more you move, the less junk you have to accumulate. (Most of my moves were company paid but the last 2 was “self financed,” so every box and every furniture had real cost associated.) We’ve owned for 10 years and now that we’ve downsized into a rental (and getting ready to move from Austin to L.A.) we have a lot of junk to go through and get rid of…
February 8th, 2006 05:25
I think most people would agree that in order to lock in your housing costs and put down roots in a community, it’s better to own when you know where you want to be.
EXCEPT that in bubble markets that security is now vastly over-priced, to the point where it could be a life-wrecking error to buy.
So curse your luck to hit the buying phase of life at the wrong time, and hold out, if you are in a bubble market. Wait as long as it takes. You’ll be much better off.
February 8th, 2006 06:10
Well, it was a pain but I cannot call it a true horror story as it all had a happy ending. I was renting with some friends a ginormous house in a Jersey shore town. We were there for maybe 2, 2.5 years. Unbeknownst to most of us there apparently was already a lien in excess of 400K against the house and the owner hadn’t been paying their mortgage too well and their credit was too shot to refinance (compounded by lien though I believe there was enough equity to absorb it). Suffice it to say I moved in for about 2 weeks with my grandmother until I found an apartment (didn’t want to rent a home again as the whole roommate scenario was getting on my nerves). Have a nice two bedroom apartment all to myself now. Rent is twice what I paid compared to my share at the house but its only half what it would cost to buy the condo equivalent and its about 20 miles further north, greatly lessening my commute.
February 8th, 2006 07:21
I think the personal advantages of owning are very significant, particularly for those who have kids. First, particularly if the landlord is failing to cover his mortgage with the rent, you are in danger of having the property sold out from under you. For people with kids, a one-year lease time frame is not security.
And of course, you can do what you want with the house. Landlords tend to do minimal maintenance on rental properties, and as a renter you generally aren’t motivated to pay for improvements to someone else’s property. So while you can afford more house renting, the details on that house tend to be a bit rougher.
However, security and freedom only get you so far. In Southern California, where you might have a choice between a $4000/mo mortgage you can’t afford for a nice house versus renting the same house for $2200/mo, it’s a no-brainer: you rent. But really, that decision shouldn’t be a matter of “renting is better than owning”, it’s a matter of “I can’t afford to buy and really have no choice but to rent, which is probably not nearly as bad as it seems”.
The premium you pay for the privilege of living in Southern California is a higher cost of housing, and for many people it’s worth it. For most people who didn’t get in during the 90s, it has now taken the form of really needing to rent. It’s still worth it for many of those people. I love my $1500 mortgage for a nice brick house with a yard in a nice neighborhood with no crime and great schools, but I’m going to have a high temperature of 29F today, while Santa Ana should hit 88F. Days like this, I think it would be awfully nice to live in California again.
February 8th, 2006 07:58
While owning a home in a stagnate market you make the payment if you are in it or not. It can take months to years to sell homes in recession, you are stuck with negative cash flow. As a renter you can pick up and be gone in a moments notice. If the home is damaged by nature you move. If the roof leaks you put out a pan and listen to the music. If dopers move in next door to make methamphetamine you leave. If your neighbor is an @hole you move so someone less desirable can move in. If your job changes in recession and you need to downsize it can be done instantly. Why? Because you are free. Free of paper trails, property taxes, building departments,etc. Smile and enjoy!
February 8th, 2006 08:54
One other factor:
Some cities have really DRACONIAN rent control laws. As a free-market-type, I view these as an abomination: They freeze the market and cause all sorts of havoc.
But as a renter, they are wonderful. The SF Bay area in particular (San Francisco and Berkeley) has some amazingly tenant-biased rent laws.
February 8th, 2006 09:50
I just exercised that renter’s freedom and left the PsychoNeighbors From Hell in the dust in a matter of a couple of weeks!! Like I am gone said, renting allows you to pick up and be gone as fast as you feel like it.
My rent is less than half of what I’d be giving to the bank for the right to be paying nothing but interest on a similar place. My new place is nearly new and is in another very nice neighborhood. I checked out the landlord’s situation thoroughly beforehand as well. Do your homework!
My dad is bemoaning the ’security’ of his house right now. He has two new neighbors who are ruining the once quiet street. One 3 bedroom has turned into a multi-family flophouse and the other is full of Redneck Rick, his adult children, and a garage machine shop with 9 cars. (No HOA) He couldn’t sell if he had to.
I’ve rented for a long time, so what’s a little longer? Even with the negative experiences I’ve occasionally had, the savings and the freedom have worked well for me. I’ll buy when I find the right place and when it pencils out to be close to renting, after the current bubble situation sorts itself out.
February 8th, 2006 10:35
“If you are a good parent and provide after-school activities”
After-school activities, like everything else, can be scaled down while still being a good parent. The expensive after-school activities just make you a ‘good parent’ to the other status-conscious parents out there. This is just another expense to ‘keep up with the Joneses.’
For instance, my daughter wanted to take ballet. There was the prestigue $$$ place owned by a former ‘famous’ ballet dancer…no I was not going to go into debt to have my daughter go there. Found another class at the local non-profit arts league. Taught by a young, energetic woman still in dance school and only $80 for three months of classes…woohoo. Too bad I’m depriving my daughter
No matter what this person made selling her house, she will be in debt again soon with all her ‘necessary’ status expenses. Love that she referred to her 2300 sf house as some tiny shack lol.
February 8th, 2006 10:42
Wondering what SoCal thinks of the presence of women in this bubble. Back with dot coms, it was basically all men in Silicon Valley and in the day trading shops. Because the housing bubble is equal opportunity, how will the bust play out? Higher chance the government will bail people out somehow? What about the Oprah factor?
February 8th, 2006 11:18
Renting is not bad. And it’s not ‘throwing your money away’ like parents will tell you or your friends that never rented will say. You are getting something in return, a roof over your head. But it does has it’s negatives. I rented apartments for 8 year and one observation I made was no matter how nice that place was, there was always that one bad element. Be it the noisy neibhors, the ghetto dudes or the crazy cat lady.
I rented out of connvenience not because I had to. I am not immune to that now as a homeowner though. One house on my block is rented to some trailer trash but at least they are 3 houses down and not 2 apartments down.
I have to agree that buying a home for most people is pretty mucg dictated by one’s lifecycle. I decdided to get a pad because I decided to get married and have kids. It was the natural thing to do for me. I was lucky the market was ok when I took the dive so it was pure luck (nice 2 story, 15yr home for 215k) Unfortunatley, when its time to get married, have kids, settle down, sometimes the timing is off. Be it a job, home prices are up and so some are stuck. It think thats that case right now so I see a lot of frustrated people. Totally understandable.
February 8th, 2006 11:20
These Loan “officers” kill me.. He is one of the “experts” spin on why you need to buy NOW.
http://www.yournextbroker.com/2005/12/least-affordable-rental-markets.html
Friday, December 16, 2005
Least affordable rental markets
You think your rent is too high? I got a list of the top ten most expensive rental markets for you to make you feel just a little better.
In order to afford a two bedroom apartment, the average wage needed is $15.78 / hour working 40 hours a week.
Now take a look at the average wage needed to afford a two-bedroom apartment in the top ten least affordable markets:
San Francisco - $29.54
Stamford, CT - $28.88
Oxnard, CA - $28.12
Orange County, CA - $26.77
Santa Cruz, CA - $25.83
Oakland - $25.75
Boston - $25.46
Westchester County, NY - $25.31
San Jose - $25.04
Easton/Raynham, MA - $24.67
The most affordable state? West Virginia, where on average you only need to make $9.73 / hour to afford a 2 bedroom apartment.
Read “Least affordable rental markets”
posted by Eric @ 12:32 PM 0 comments
Uh, Einstein, car to work up the numbers on a similar MORTGAGE payment in these cities?
February 8th, 2006 12:39
dreaming07 - I think that jumping to conclusions is not helpful. My daugther took ballet through Park & Rec for 2 years, and they don’t offer classes at her level, unless you drive to their downtown ballet center. So now she goes to a studio and it costs about $150/month for 4 classes/week. I taught my kids piano for the first 4 years, until they started playing original music, and now pay $ 200/month. My son took free sax lessons in the school band, but the teachers don’t give individual attention (the 8th grade violin students hold their bow at a 90 degree angle, so he is in private sax lessons ($90/mo). Saxophone rental is $65/month. My other son takes violin lessons from a high school student, $40/month. Violin rental: $15/month. CA budget cuts have resulted in no continuing after school athletics, so any soccer, tennis, we have to pay. Tennis lessons are $160/mo. I did this through Parks & Rec for 4 sessions, but with 15 kids, each kids got only 3.5 minutes of actual playing time in each hour, so we switched to private lessons. With the 4 of us, it is worthwhile. I do think some parents are so caught up in saving, that they forget to provide for their children. I am not impressed with anyone who is saving $1000 per month, but doesn’t let their child sign up for volleyball or piano, or water polo, or whatever thei dream is. Gone are the days when kids went after school to the field and played baseball. It all costs money now, the schools no longer fund this. I am sorry that you would think of paying for a child’s education as being a show of status. I wonder in what part of the country you live, and perhaps it is much cheaper for you. Then you are fortunate in that regard. My post was to point out the high cost of living in San Diego, and how the mortgage payment played a huge part.
February 8th, 2006 12:57
Any observations on the South Florida market out there?
February 8th, 2006 13:00
NATIONAL FORECLOSURES INCREASE IN EVERY QUARTER OF 2005 ACCORDING TO REALTYTRAC™ U.S. FORECLOSURE MARKET REPORT
Nearly 847,000 Properties Enter Foreclosure During The Year; Florida, Colorado and Utah Post Nation’s Highest Foreclosure Rates.
Irvine, Calif. – January 23, 2006 – RealtyTrac™ (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released year-end data from its 2005 U.S. Foreclosure Market Report, which showed that 846,982 properties nationwide entered some stage of foreclosure in 2005, and a 25 percent increase in the number of new foreclosures from the first quarter to the fourth quarter.
RealtyTrac publishes the largest national database of pre-foreclosure and foreclosure properties, with more than 550,000 properties in nearly 2,000 counties across the country, and is the foreclosure data provider to MSN House & Home, Yahoo! Real Estate, AOL Real Estate and HomeGain.com.
“Overall U.S. foreclosure numbers climbed steadily over the course of the year, with more new foreclosures reported in every quarter,” said James J. Saccacio, chief executive officer of RealtyTrac. “This trend appears to be moving the real estate foreclosure market back to its historic levels.”
Saccacio noted that the number of 2005 foreclosures needed to be kept in context. “Even with almost 850,000 properties entering some stage of foreclosure across the country over the course of the year, this represents less than 1 percent of all U.S. households. And the increase in U.S. foreclosures from Q3 to Q4 was just below 5 percent.”
February 8th, 2006 13:01
Juanita,
That would be a great question to ask in the Forums. I think you will get a better response there. Just click on the “FORUMS” tab in the header, or under the site map.
SoCalMtgGuy
February 8th, 2006 13:08
Dreamin07 - By the way, I would consider you a good parent, too, since you enrolled your daughter in an activity. Some people just don’t want to spend any money on their kids, preferring to either save it for themselves, or spend it on their own hobbies or toys.
February 8th, 2006 13:09
Having rented on and off for 20 years (yikes!) — no horror stories. I love my urban rent control.
If we wanted to live in a HOUSE, I’d probably be more open to paying a SMALL premium for ownership (not double the cost of renting the same place!). Once you’re into a house, it’s easy to get sucked into gardening and home projects that benefit the landlord rather than you.
But I hate gardening and puttering around the house, so we’re basically condo people. Once you’re on the big-city apartment-in-a-large-building track, the major benefit of buying is to avoid still paying rent when you’re 80. (Our building is too big to be allowed to go condo without major legal wrangling, if then.) It’s difficult to lock in a lower payment than rent control provides, once you add HOAs, not to mention property taxes and insurance. But I’m sure not going to bust my behind to lock in a HIGH payment.
February 8th, 2006 13:21
mtnrunner2:
You’re caught in perfect parenting. Maybe it’s good for you, maybe it isn’t.
If you can’t recognize these activities are luxuries and you are not saving, then you are in for a big surprise later in life.
I plan on putting my kids in volunteer work before I put them in too many activities. Why? Because:
1. I can save for retirement. I want to make sure society does not have to pay for my retirement due to my excesses
2. They can learn that life is not one big competition, it involves a lot of cooperation
3. They will learn how to help others instead of just thinking of how great they are or must be.
4. I don’t think their life will be ruined because they didn’t learn everything.
5. I believe in focus and rest.
6. I want my kids to get bored and give them the chance to desire things
7. I feel that when you throw kids into too many activities, family life deteriorates and you are sending them the message that they are never quite good enough; that it’s a dangerous world out there and if you’re not good at everything you’re going to be left out. Of course there are exceptional kids who have it in them to do everything but it’s not the norm.
February 8th, 2006 14:09
But as a renter, they are wonderful. The SF Bay area in particular (San Francisco and Berkeley) has some amazingly tenant-biased rent laws.
I think tenant-biased rent laws should seek to fill the “information gap” between renters and landlords only.
Price-control will not solve any problem. On the contrary, it breeds slumlords and it discourages future supply.
February 8th, 2006 14:20
My siblings and I were raised in the 1970s. We attended public schools and we did some after-school type activities (most of these were school related and school funded like working on the school paper). In junior high, I did no activities after school. Same with my siblings. Our family did, however, do a lot of activities together such as hiking, family art projects and so on. We also read a lot as kids (at the public library to which we could walk as we lived in a city with sidewalks).
All four of us attended Ivy League schools and we all went on to get graduate degrees from leading universities. My one sibling even became a Rhodes Scholar. My point here is that we all got great educations and have successful careers. So, our lives and our potential earning power weren’t destroyed by our limited activities. And of the four of us, the three of us who did the fewest activities as children have the most activities and interests as adults (working as volunteers, swimming for an adult team etc.).
Reading Mtnrunner’s post and watching my siblings (who have opted to follow a different plan than my parents did and who spend their free time chauffeuring their children to endless activities), I have to wonder how effective this modern approach to child rearing is. Does it really produce brighter children? Does it really produce close knit families? Or is this more of the MacMansion lifestyle?
I am an ex-professor (I left academia in part because the salaries were so low that I couldn’t afford a house
). What I saw in five years of teaching…well, none of it would seem to justify this approach to parenting. We aren’t producing kids who are well-read, intellectually curious and so on. My students, bright kids and products of some great high schools (public and private), never ever read a book unless it was assigned. None seem to have any real passions. They did ballet, piano and so on to get into college and once they were in, they kicked back. I came to believe, maybe rightly or maybe wrongly, that the push had come in large part from parents who were very into status.
I don’t mean this as a criticism of Mtnrunner (for all I know, her kids are very self-motivated and wanted the activities and would have found a way to do them even in a poor family). But I do think that for many, many parents, the overscheduled child is just as much a part of the MacMansioning of American life as buying a big house in the suburbs.
That said, I recognize how difficult it is not to cave into the pressure to do all these things for your children. Do the same skills which enable you to resist the pressure to buy a house when everyone screams “BUY!” enable you to resist the pressure to produce the overscheduled child?
As I contemplate having a child, I have to hope that I’ll be able to buck the trend and my child will be okay just as my siblings and I were but I really don’t know if this will be possible.
February 8th, 2006 14:43
I’ve rented for most of my adult life and don’t have any real horror stories, but sometimes it seems as though property owners are required to fail some sort of mental health test before they’re allowed to rent to tenants. I found this particularly to be the case when I was living in the SF Bay Area, where it seemed as though everyone I knew had a crazy-landlord story. (I hiope I haven’t offended any sane landlord-types out there. I wish I was renting from you!)
For a little over a year in the mid-90’s my husband and I owned a historic home just outside of Boston that suited us very well for a variety of reasons. We sold the house when we got divorced. After a few years the divorce wasn’t working out, so we got back together and eventually remarried. After all that, our biggest regret is selling the house, and not just because it’s approximately tripled in value in the last 10 years. We still have fond memories of the place, and of having a measure of control over our home that one just doesn’t get in a rental.
Now we’re renting in NYC, where it makes financial sense for us to do so, although lifestyle-wise it’s definitely sub-optimal. Years ago we both recognized that home values were getting seriously out of whack, and that made us feel better about not being in a reasonable position to buy. We’ve taken advantage of this time by paying off debt (we’re both in the black and it feels good!) and building up a nest egg, and this time around we’re doing our homework, learning about how the market works and keeping our ears to the ground so that when the market corrects itself we’ll be in a strong position to buy a home the old-fashioned way, with a decent-sized down-payment (real equity!) and a fixed-rate mortgage. It’s probably pretty clear that we would prefer to own, but not at the risk of financial jeopardy. I do believe that “the American dream of home-ownership” is highly overrated. What makes sense for one person might not make sense for another. It seldom makes sense to do something just because “everyone else is doing it”.
About the video clip - loved it! Living modestly within one’s means is highly UNDERrated…
February 8th, 2006 14:53
It’s not just the price control (fortunatly, since the state has mandated vacancy decontrol, that has helped, that and the Searle decision), but the limits on evictions…
Basically, even after the lease is up, you can’t evict someone as long as they keep paying rent, except for something like an Ellis act or owner-move-in eviction (which are pretty restricted in themselves).
Thus you can get pretty stable renting in these communities: I rented the same apartment for 9 years. Although admittedly, I screwed up and SHOULD have bought a condo or similar back then (or have my grandma buy it and rent it to me), as prices for purchase were reasonable back in 95, and I knew I was going to be in berkeley for several years.
February 8th, 2006 16:58
All-
CA after-school activities are a special case.
While I am a right wing Republican, and despise the socialist government of our once Golden State, even I have to admit that the CA public schools really do have money problems. And they’re not just due to avaricious unions, wasteful bureauracies, etc. We have those things, but their impact is limited.
The community next to mine, San Marino, is as upper income a suburb as you can get. Never heard of San Marino? That’s because we’re talking old money here. The ancestors of the people in in San Marino made made their money in the 19th Century, and the people there prefer to keep a low profile.
Until just a couple of years ago, San Marino High School was holding some of its classes in double-wide trailers located in the parking lot. The old high school building was too small, and instead of building a new one, the department of ed bought trailers instead. Think about that. There is no shortage of people with political influence in San Marino, but the classes were still being held in trailers. There is no shortage of money, either — but classes were still held in trailers.
In my experience, politicans are seldom reluctant to build infrastructure. Public works projects create jobs, can be used to reward contributors, and serve as symbols that local officals are actually doing something and improving the community. Pols will fall all over themselves to build something whether it is needed or not.
There are literally hundreds of schools using trailers in SoCal. That’s because the schools really don’t have any money. Sure, part of this is due to our socialist state government predictably shortchaning kids in order to take care of their army of unionized public sector workers. But part of it is due to the fact that the massive influx of illegal aliens over the past 10-15 really has placed a near-intolerable burden on the schools.
So Mtnrunner really does have to pay for everything. She’s not making this up.
Now, the phenomenon of “perfect parenting” does exist here. My kids were just invited to a birthday party featuring a petting zoo, clowns, ballon artists, catered refreshments, and pony rides. All of these things will be trucked in and set up on the front lawn. The party is for a girl who will be turning three. This sort of thing is alive and well in SoCal. Our upper middle class strivers are just as obnoxious, if not more so, than those elsewhere.
But everyone has to pay for activities. If someone is doing this, it doesn’t mean that they are trying to create a Stepford childhood.
February 8th, 2006 17:10
Rental horror story I heard today:
Guy rented a house with his family for somewhere between 10 and 15 years. He had tried to buy the house a couple of times but the landlord wasn’t selling. Landlord calls: guess what, his son needs a house, so pack up and move.
Not enough time to find another good situation, so family moves to a nearby apartment complex that seems nice enough, while they look for a house to buy. They have been there about a month. Two breakins in the complex and stuff stolen from their storage area in the garage. Car got windows broken and stereo stolen. They cannot wait to get out.
February 8th, 2006 19:02
Having rented in 7 different metropolitan areas in the last 18 years, I haven’t had any really bad experiences but I did learn to stay with professionally managed rentals. Many owners just can’t seem to accept normal use and tend to meddle.
The downside of renting is security and control. You don’t have full sovereignty over your home. Someone else has legitimate access and can give permission to law enforcement in may localities. Some have mentioned being able to walk away if things go bad. My experience after Katrina was to appreciate the benefits of of a piece of dirt. As a renter, I had to wait for the owners to make repairs to prevent further damage. I was at risk of being evicted but fortunately wasn’t. In effect, renting left you without a way to manage your recovery.
Now on the other hand not owning, the repairs were not my responsibility. Dealing with the insurance wasn’t my problem. Funding repairs the repairs wasn’t coming out of my pocket. I was able to pack up and leave when I was transfered. But had my place been wiped out, I had no right to a slab of concrete for a trailer.
The real value of home ownership is that being able to control your costs in the retirement years. Unfortunately, many owners these days are not moving toward ownership. They keep borrowing from their future consumption by pulling out equity. A lot of early baby boomers are going to find retirement delayed if they aren’t able to sell high and pay off the HELOCs they’ve taken on based on the appreciation.
Rent or own, the goal should be to be free and clear for retirement so that rent or mortgage payments aren’t part of your monthly expenses.
February 8th, 2006 19:14
You don’t have full sovereignty over your home.
Huh? Buying does not give you “full sovereignty” either. If you kill someone in your own home, you can still get arrested.
February 8th, 2006 19:26
Bought a house in an area I was unfamiliar with, market softened, I am gone… and so is my money. Now I rent and have renters insurance and an alarm. No worries.
February 8th, 2006 21:15
“If you are debt free because you don’t have kids to raise, or you live in Wyoming (where you can rent a house for $800/month), then you don’t have bragging rights.”
Give me a break. Having kids and/or living in an expensive area are not God-given rights, or things that are forced on people.
But then, I don’t know who I’d be bragging to anyway, given this attitude of entitlement that is so pervasive today.
February 8th, 2006 22:33
Joe Schmoe - Finally, someone who understands!
Anon 13:21 - I guess you are not a parent yet. Once you have kids, I bet your heart will open up, and you will want to do things for your kids, will want to your wife to quit her job so she can be home with the baby.
The point remains: being a good parent is expensive in California! So try to get a low mortgage, because you need money for parenting, saving, gas, health care, insurance, and unforeseen expenses.
Also, those of you who without kids in high school: you don’t know this yet, but college application is a whole new game! Budget cuts force them to reject 2/3 of applicants. To get even considered, you need A average, 4 years of increasing progress in an extra curricular activity, and hundreds of hours of volunteer work, preferably with some responsibility. This is for a public UC college.
I hope this puts an end to berating comments. When you love someone, you like to do things for them. I could never imagine withholding saxophone lessons for my son, who loves it so much. For what point? So I have a few thousand dollars more for myself at retirement, to take an extra cruise?
If you read my post, you’ll see that I am financially conservative, having had a 15 yr mortgage, thus HALF the house we could afford. This was not possible in San Diego. I wish it was, and perhaps some day it will be again.
Peace to all, and I hope everyone who comes here can teach, educate, share their own experiences and dreams, and refrains from berating others. SoCal has worked hard on this site, and let’s keep it upbeat in honor of his efforts.
February 8th, 2006 22:56
I’d like to chime in on this discussion, because I think the more stories that are out there, whether positive or negative, the better decisions people will make. I haven’t made all the right decisions along the way, but primarily what I think I can bring to the discussion is positioning not to fail, and the importance of recognizing opportunities when they develop.
In 2000 my wife because pregnant with our first child and we decided to buy a house. At the time we were renting in Temecula, CA. I am a software engineer, and that time period was very unstable for the industry, so I was wary of taking on a mortgage payment that would be difficult to make if I became unemployed. We wanted my wife to be able to quit her job and stay at home with the kid(s) until at earliest they started school. We began looking in Temecula and Fallbrook. At that time they were about 200k for an average home. Although we could afford it, I knew that if I had to go on unemployment for 3-6 months while looking for a new job, plus pay the increased health care payments on COBRA we would default on the house. So instead we started looking in less desirable neighborhoods where we could safely get in a house and start building equity regardless of what the future brought. We settled on a 1-bedroom house built in 1947 in Lake Elsinore that we bought for 89k. Our PITI was only 12% of our income on a 15yr loan, but we felt totally safe for whatever the future brought. Although we put zero down and had to pay PMI, our mortgage payment was actually less than our previous rent payment.
That’s when the first opportunity opened up and we took action. Rather that losing my job, it actually became more secure. The owner of the company I was working for decided to cut virtually all operating costs, by laying off all of the work force (about 50 employee’s) and retaining only myself and another engineer. Then we stopped doing new business and only supported existing contracts, while waiting for the tide to turn in the industry. What this meant for me was that I was working only about 15 hours a week but retained my full salary.
Instead of wasting all that spare time I now had, we decided to build equity faster by remodeling the house. This was not a simple H&G remodel. I completely gutted the house down to just the external wall studs and rebuilt everything. We lived in an RV for a year while working on the house. This was really an awesome experience. I learned so much in the process and had something to be really proud of in the end. I also discovered that labor makes up the lion share of home building costs. I rebuilt this house for only 18k because I did all the work myself. Again, this 18k was not simply a paint job. It included new framing, trusses, drywall, electrical, copper plumbing, sewer plumbing, gas plumbing, heater, wood floors, carpet, bathroom fixtures, doors, custom vinyl frame windows, window coverings, kitchen cabinets, kitchen countertops, kitchen appliances, lighting fixtures, hardie siding, everything! When the building inspector came to do the final inspection and reinstate the occupancy permit, he was floored at the quality of work, and without using a single contractor. Let me tell you friends, a dedicated amateur with enough time can out-perform an overworked professional that needs to turn a profit, every time. That doesn’t just apply to construction, but in virtually every aspect of life including handling your personal finances. We don’t have to be FBs, but it requires time, dedication and educating ourselves.
Well, after this endeavor, we moved back into our house, which was now a very nice place to live, and refinanced to roll the remodel costs into the mortgage. The new principal was about 105k, but the house was now valued at 135k, so we were able to drop the PMI, without ever submitting a down payment, after only one year.
And that’s when the second windfall occurred. Housing prices, as we all know, started soaring. We were excited about how much value was in the house after the remodel, but 25% yearly appreciation was absolutely without parallel. I for one never saw this coming, and I believe most of us homebuyers at that time didn’t either, but when opportunity knocks, listen. So we watched and waited. In the summer of 2005, I thought that the market was peaking, so I listed. Our agent wanted to list at 205k, but I had done the comps independently and felt we could get 225k with all the work we had put into the house. So we listed at 225k. Within a week we had 3 full price offers. We went into escrow twice with the buyers failing to complete escrow due to loan qualification problems. Finally in early October, we had two good offers to pick from with relatively sound buyers. We chose an offer at 10k more than asking, but the buyer wanted 8k back in cash. Wow! Buyers taking money out of the house before they even owned it. Amazing. Here these kids are now paying 1900/mo for a 700sq ft house in a bad neighborhood. Honestly, I feel a twinge of guilt when I think about it. Should I? What moral culpability do we as sellers have in creating FBs? I know if they hadn’t bought my house they would have bought someone else’s. I console myself by knowing that at least they got the very best little house in that neighborhood that there is.
Anyway, we now needed a new place to live. Both my wife and I grew up in the Temecula area, and we wanted to move closer to an urban area. Los Angeles was our preference, although San Diego would have been ok, too. Also, we wanted an older house, either bungalow, craftsman, Victorian, etc. in a neighborhood where we could walk to the barber, bakery, grocery and have a short drive to downtown. Having spent 30 years in the IE, I’ve had intimate knowledge of the evil virus called tract homes first hand, and I want a vaccine. Also our kids (now two) are getting closer to school age, so quality schools were a priority too. Well guess what. Getting anything approaching this in LA is going to cost $5500/mo or $2500 in rent. Call me old-fashioned, but I want my PITI ratio to be about 30%. I make an above average salary, but even then, you simply cannot contribute a significant amount to your 401(k), save for the kids’ college, and have a security basket, a savings account, modest investments and a decent quality of life without limiting your PITI to around 30%. So many FBs have completely sidelined all the other important things in life for the solitary goal of owning a house that is beyond their means.
We had toyed with the idea of moving out of state but never seriously up to this point. I travel a lot for work, and had realized that there are many awesome places to live besides California (and some really lame ones, too). And when we really thought about it, we didn’t actually take advantage of what California offers. We really only went to the beach a couple times a year. I haven’t been skiing in years. I have a motorcycle in the garage that rarely sees the dessert. Occasionally we’ll see a concert. The only thing we really do regularly is go to Dodger games. I know I’ll miss that come April, but really is it worth the premium? And besides, entertainment may be a top 5 priority, but at number 5, there are 4 more important things that we were sacrificing by staying in California. So we put our stuff in storage and went exploring.
We wanted to stay in the west, so the kids wouldn’t be excessively far from their grandparents. In November we moved to Boise. We rented a very nice, fully furnished 2-bedroom apartment with a gorgeous mountain view for $1500. This included all utilities, cable TV and high speed Internet. Since I telecommute, my job was unaffected and we were free to find exactly where we wanted to live.
Boise had some of what we wanted, but not everything. We spent the next three months driving 15,000 miles, exploring towns like Portland, Medford, Bend, Helena, Idaho Falls, and finally discovered Spokane.
In Spokane we found exactly what we were looking for. Here we can live in a large, beautiful 80-year-old craftsman within walking distance to neighborhood parks, schools and businesses. A very short drive to a surprisingly vibrant downtown with comparatively no traffic. Four enjoyable seasons. Concerts, Broadway shows, good food, college football, basketball, MiLB Baseball, hiking, skiing. And when we want to do some big city things, it’s an easy weekend to drive to Seattle. I know that most people would never consider leaving California, but I want to say, if you are worried you’re about to become an FB and are desperately trying to buy a house in California, realize you have options. Renting is one. Leaving is another. Make good decisions. Even out-of-state prices are not exactly bargains. Just because I can get a house in Spokane for less than half of what it would be in California, doesn’t mean it’s a bargain. I estimate that Spokane is 18% over valued right now. That’s why I signed a lease last week instead of buying right away. I’ll watch the market for the next 6-12 months and decide whether to buy or continue renting. Right now I’m renting a great 4-bedroom house 3 miles from the city center for $1100. Deer graze in the yard daily. I don’t know for sure whether prices here will continue to climb, or fall instead. But what’s important is not setting yourself for failure. If prices continue up, I can keep pace by saving the extra I have from renting and the interest I’m earning on the money from selling our house. If the prices go down, that’s just gravy. Don’t put yourself in a position where you have to be right to succeed. Instead position to succeed regardless. I could have bought a 200k house in y2k instead of the 89k one. I would have made even more when I finally sold in 2005. But what if I had lost my job? And remember the run-up was not anticipated in y2k. By being prudent, I was able to succeed regardless of what the future held.
If I’ve learned anything during these last 5 years it’s this; make sure you set up not to fail before looking at how to succeed, be quick to take genuine opportunities, and be patient at all other times. Best of luck to all.
February 9th, 2006 00:35
Gilgamesh,
Thanks for the great post! I know that took a lot of time, would you mind posting that into the forums? I think many more people will see it there. Let me know, and I can do it if you wish.
Thanks!
SoCalMtgGuy
February 9th, 2006 06:55
That’s all commendable, but I don’t think what Gilgamesh did is something most people are capable of doing, not so much because few people have the time and skills to do a major remodel on a home (sounds like the house would have appreciated regardless), but being that flexible as a family. Most people are either going to be incapable or unwilling to do things like live in an RV while waiting for their remodel, or drive around the west for four months. Not that I think that flexibility and, I would guess, sense of adventure as a family is anything but commendable and something to emulate, but it’s unusual.
My approach would probably be to go ahead and buy the house in Spokane at the 18% inflated market, if I knew I was going to stay there in the long-term. Personally, I’d want to settle in. I’m not saying that’s what Gilgamesh should do, but that’s what would be right for me. Living in an area that is probably similarly, if not more inflated, I sold last summer and bought something in a better location in the same area. I suppose I could have rented and waited out the decline that I expect to happen here, but moving is disruptive and expensive, and I’m not going anywhere else any time soon (perhaps never!). Most importantly, I can easily afford what I bought and that is very unlikely to change.
February 9th, 2006 07:08
“Anon 13:21 - I guess you are not a parent yet. Once you have kids, I bet your heart will open up, and you will want to do things for your kids, will want to your wife to quit her job so she can be home with the baby.”
Actually I am a career woman with two children, 7 and 4, and happily married to top it off! My son was born 2 months premature at 3 lbs. He went through open-heart surgery at 8 lbs because of a congenital heart defect due to Down Syndrome. My daughter is fine.
I am an over achiever with a career but my son’s birth taught me a great lesson on how to get your priorities right and stay focused. We live in the lap of luxury and in an age of entitlement. We honor intelligence and competition but forget empathy, compassion and true cooperation. My son has shown me a whole new dimension to life and it’s not about ballet, piano and all the other stuff. Of course I think of offering these to my daughter but I don’t think it’s essential or that her life will be screwed up if she doesn’t do it.
I just resigned from my job 2 days ago to start my own business. The work will be just as hard but the schedule will be more flexible. I will be taking a pay cut for the next couple of years but when we bought our first house we made a conscious decision of always living on one salary, the lowest one. It’s paid off, today we’re all set to do what is truly the best for our family.
I have nothing against activities, what gets to me is the amount of people who think they are necessities. As far as I’m concerned we live in a democarcy, we are free to choose and we probably have too much choice for our own good!
What got to me in your post is that you judge people who don’t over shcedule their children without realizing that maybe different families need different things.
The other point that I found disturbing is that you said you don’t admire people who save. In fact, every person who saves is one less person to pay for at retirement. You should be happy that someone will be able to pay for themselves, it will be less money taken off your paycheck or your child’s in the form of taxes!
As far as I am concerned, we are free to make our choices. Nothing is forcing one to stay in Califronia. Personally, I would never move to California without the money to get a godd lifestyle because for me it’s like baning your hear against a wall.
February 9th, 2006 07:29
Sorry my last paragraph is off..
As far as I am concerned, we are free to make our choices. Nothing is forcing one to stay in California. If less people were willing to live with the California BS, the situation would not be so. Personally, I would never move to California without the money to get a good lifestyle but we live in a society where many people are allowed to mismanage their lives (bankrupticies galore and 50% divorce rate) and I guess I just have to accept that because that’s our social contract.
Accept my choices and I’ll accept yours because generally speaking we are all just trying to thrive with the best of our knowledge and capabilities.
February 9th, 2006 08:50
anonymous - I was misunderstood. I said that I don’t admire people who save, but don’t spend money on their kids in order to do so. Some people brag about saving $2500/month, or $1500/month, and I could do that only if I didn’t spend any money on my kids. To get into even our public university, you need activities with some proof of accomplishment. Simply taking piano lessons isn’t even enough, although that’s all mine do. My kids have a low chance of getting accepted into my public university system, because they are NOT pushed. They actually have time to play, ride their bikes, eat family dinners, and get to bed early. I hope that puts an end to the misunderstandings. If we lived in a cheaper part of the country, we would be spending less on living expenses.
But I think the high cost of living is temporary. We’re waiting for a 50% correction in housing prices, and sold our house for that reason. Also, my husband loves it here, and if it weren’t for him insisting on staying, I would move, to a cheaper place, like Spokane. I like Gilgamesh’s well thought out move. He did the research for us - Spokane is the place to be. Maybe someday….I would be so happy to live someplace cheaper!
February 9th, 2006 10:17
Anon 7:08 - I reviewed my post to read where you thought that I judge people who don’t overschedule their kids. I wrote:
“If you are a good parent and provide after-school activities…” and “Do you have any kids, and if so, do you offer them opportunities for piano lessons, gymnastics, soccer, tutoring? Not all of those, of course, but at least one or 2 activities per kid.” Do you think that 1 or 2 activities for each child is “overscheduling”? Why? You also wrote that I don’t admire people who save. Why? I save, actually 10% of our income. What gets me is people like my brother-in-law who hoards his money, but won’t let his kids take piano lessons or ride a horse, because he’s too tight, too stingy. It’s easy to save lots of money if you’re a tightwad, I think. The whole point of my post is to live a well balanced life, not overscheduled or showy or flashy or luxurious, costs a lot of money in San Diego. Housing costs are really high, elementary schools don’t provide music or PE so you have to cover that yourself, and middle and high schools have PE programs only for the top athletes. There is no subsidized parks and rec program, and in all of San Diego, there are less than 6 public swimming pools!
February 9th, 2006 12:08
Just the fact that you wrote: “If you are a good parent and provide after-school activities” is a point of contention.
I don’t think I NEED to register my kids in after-school activities to be a good parent. I would only do it if there was truly no way out of the system but there is… We can all move away. And if I was forced to conform when more sane alternatives existed I’d leave but then again, that’s me. We have freedom and I use it.
I don’t know what the perfect number is in terms of activities per family. I know what it is for me and frankly, it changes with life stages and with the seasons! In our house, family meals are a top priority. If an activity interferes with our family meals, it will not be welcome.
What I do know is that there are a lot of divorces, kids on ritalin, depressive mothers and people over their eye balls in debt. So somewhere in there, there are a lot of people mismanaging their lives. And their mismanagement affects all of society.
And we’ll be seeing the repercussions of these excesses pretty soon.
February 9th, 2006 12:16
Enough chit chat about who’s the biggest parent. Just strip some more equity, buy an olympic size pool, the biggest jungle gym Costco has to offer, head down to Guitar Center purchase one of each instrument. After all, its practically paid for already..real estate never goes down.!
February 9th, 2006 19:51
This forum is about debt and housing, so I don’t want to divert further attention to parenting.
Basically, if you have kids, then more of your income goes to them for whatever reasons (medical, activities, food, clothing, school supplies, travel & entertainment), and it’s much harder to make ends meet, especially with high mortgage payments.
I often wonder how parents can afford to pay for all the things they buy for their kids, the swimming pool, soccer field, expensive traveling sports teams, the $1500/year school dance team, etc. Even the elementary kids wear Ugg boots now. My husband keeps saying, “Gee, there sure are a lot of rich people in Poway”. And every week, another parent drives up in a brand new luxury SUV or sports car. Moms have traded in their SUVs for foreign luxury cars. After reading this blog, I know how it’s all paid: Home Equity Withdrawal.
I spoke w/ my appraiser friend today, and he said that refinancing is a thing of the past, but people are still taking out those HELOCs. Give it another year. I think we’ll see a reduction in spending. But it will take time to shake out. Appraisals are still coming in high, and the reductions are gradual.
February 9th, 2006 20:30
Mtnrunner—Don’t freak out so much about your kids’ college education. From what you’ve posted, they have one or two strong interests, and colleges really AREN’T looking for the “everything” students because they usually burn out. And for every school that screens out everything but 4.0s, there’s another school that actually pays attention— I did not get accepted to Caltech, but a tiny (sub-800 students) engineering college, name of Harvey Mudd, accepted me “unanimously” and tried to give me a sports scholarship, of all things, because I’d been in track my freshman year. (!)
I ended up going to a private college out-of-state— in Spokane, Gilgamesh, which doesn’t suit me the way it does you because of limited employment opportunities, but awesome place to attend school— and that cost me LESS than the UC system for a better education, because I got scholarships to cover full tuition. Maybe I would have gotten those with the UC, too, but they were in one of their slumps at the time and I didn’t want to consider it.
So don’t ever buy into the idea that you have to push your kids. Instead, let them do what they’re doing now: an activity for fun and lots of free time. The creativity they learn will shine through their essays.
(Incidentally, it’s probably just as well that I didn’t go to Harvey Mudd, since I decided not to be an engineer.)
February 9th, 2006 21:57
I think this whole discussion about college thing is overrated. I’m getting my Masters’ degree right now and 5 years ago I graduated with a B.S. There are PLENTY of schools in the Midwest that are happy to take students. I went to school with some people and still have friends from CA. The school paid for their full ride from CA just to get some diversity on campus, since us white midwesterners are generally all the same =).
If you pay your child’s college education I suppose that makes you a better parent. You know how I paid for school? I took out student loans. Yeah that’s right, my parents gave me about 100$ a month to buy beer. I’m still paying $106/month for the next 6 years on my bachelors degree, but that’s okay. I’m damn proud of it.
Regarding the topic of renting. I rented a real nice 3/1 for a year. Made tons of improvements to the yard and loved the place. been living in apts. for 5 years now. It’s not too bad and with Florida hurricanes it’s nice to be able to evacuate and not worry if the windows get blown in. I don’t have a house, therefore I don’t have equity to tap and pay off the remainder of my student loans and CC bills. That’s okay though, because this weekend I’ll be at the bar on Friday night, fishing on Saturday, and relaxing on Sunday while my homeowning friends are partaking in the seeminly required home remodeling project to replace something that isn’t broken, but it’s good enough for the home magazines.
It’s a sad world that we live in sometimes.
February 10th, 2006 06:16
Of course, there are significant advantages to owner-occupation. You can paint/decorate/remodel the house to your own tastes. Contrary to current popular opinion, traditionaly most remodeling does not pay for itself come time to sell. It is also easier to maintain the house to your own personal standards: If you’re a perfectionist, you can pay/and or work to keep it in tip/top shape, and if you’re a cheap slob, you don’t have to pay for cosmetic stuff you don’t care about. It is because of these benefits and others that you put on owning your own home that it makes sense for the bank to lend you the money in the first place, otherwise the logical thing for them to do would be to buy the place themselves and rent it out. Traditionally, the transaction costs associated with the purchase of real property have meant that for those who intended to move in less than ~5 years renting made sense.
February 10th, 2006 06:23
I plan on renting and investing excess into the share market - then again, I could probably afford to buy a house since I don’t feel the need to forever consume or show off to friends with the new plasma / stainless steel kitchenware / SUV / holiday to the bahamas.
A bank may never give me a loan though as, I am ashamed to admit, I am a scarred individual. Yes. It’s true.
As a child we never had carpet until I was about 8, I never learnt to play the piano or the sax, never did ballet. I went to a public school in a poor area. My Mum made my school uniform in primary school and we never had ‘brand name’ clothes.
I did manage to graduate top of my university class though…
And I guess working as an IP attorney isn’t so bad.
PS If I wanted to learn to play the piano (as I have done about 5 times in my life), I will pay for lessons myself.
February 10th, 2006 20:33
Again, college is different now. If anyone was accepted into a college in the last 4 years, and you had a different experience, tell me. I went to a UCSD parent meeting 3 years ago, and they impressed upon us that the applicants need what is now shown on their webs site:
UCSD College Entrance Requirements include:
Special Talents/Achievements/Awards
Noteworthy accomplishments in a public venue in visual and performing arts, communications, athletic endeavors, as well as demonstrated written or oral proficiency in a language other than the student’s native language.
Community and Volunteer Service
Demonstrated and substantial involvement in charitable work or community service.
Anyway, I am not planning to pay for my kids’ college educations. I paid my own way, too. I spent the money on the Montessori preschool and am spending the money now, so I invested in their enrichment during the times of greatest brain growth. Brain development is greatest in the first five years of life, and then again ages 11-18, so opportunities and enrichment during those years have a big impact. Hopefully this will pay off, and they’ll get scholarships. But lots of parents feel obligated to pay for all of college, and go deep into debt to provide this. I would never be able to retire if I paid for 3 kids to go to undergrad and grad school. We do have a college fund, and it will cover several years of tuition.
It’s interesting, that in Europe, college education is paid by the government. They can afford it, since they don’t subsidize a large military. How does Switzerland get by without a military? Why do we need one? Why don’t the terrorists fly planes into Swiss buildings? Perhaps if we stayed out of the Middle East, i.e. no meddling, they wouldn’t hate us so much. So if we stopped meddling in the Middle East, we could eliminate the army, reduce the size of the government, and have money for national health care and improved education, and free tuition at colleges. But I guess that would upset all the pro-gun and pro-Busch people.
February 11th, 2006 00:22
mtnrunner2
I graduated 3 years ago.
You are wrong - college is no different.
What is different is parents thinking that little Johnny needs private piano lessons to get into university. The USA is filled with universities - there isn’t exactly a shortage. Most professions need a doctorate these days anyway - if little Johnny really is brilliant, he can change to Harvard then.
Private lessons are a luxury - I have no sympathy for those parents who are struggling because of them.
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