People and Gas

<A HREF="http://money.cnn.com/2005/10/03/pf/reader_gas_prices/index.htm?cnn=yes" target="_new">CNN Money</A>

Yeah I know it's CNN. But it's about what people are writin in to say. Because gas prices are so high, they're selling their house over their cars, cutting back on healthy food their kids eat, etc.

Seriously.. are people really this stupid? To live that far outside their income that they can't figure out somewhere else to cut back? I do about $80-90 in gas a week right now with current gas prices. Last year, it was 60/week. Does it really hurt people that much to see a 30 dollar a week, 120 a month increase? I do about 18,000 miles a year in driving, maybe 20k.

I just can't believe it's hurting people that bad and they're blaming the president and everything else. It's their own damn faults for being so irresponsible on energy use.

Gas is $2.94 a gallon here today, which happens to be the national average as of yesterday 5PM.

People are stupid.

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A $120 a month increase is pretty huge.
$1,440 a year...

That would be like your boss taking $1,500 from your payckeck for the year. If you make like 50K a year that might not hurt as much as a person who only makes 22K a year.

Yes, people are idiots and if you can't afford to pay for high gas prices they shouldn't own SUVs/trucks/and big cars. If you are strapped for cash you should buy a smaller more gas friendly car...but people dont want to do that. It's not the W's fault that they bought the wrong transportation.

I wonder how much people actually spend on gas a week/month here and what the gas prices are....
Riser goes for $85(average of the range you gave) 2.94/gal
I go for $35 a week at ~$2.70/gal

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It's not the Presidents fault. Try the stinken LIBS!!!!!

for some people 100 bucks is pretty hard to find on a fixed budget living in an appartment. but there are many people that buy homes worth more than their 10 year income, live 100 miles away from their job and wonder why they are so screwed. its all just so they can brag about how nice the neigborhood is and how big the house is. makes me sick. even if they are not the kind of people that are just braggards they sacrifice day to day happiness of not having to drive for an hour just to live in a house a little quieter. i would die if i had to drive an hour to work every day.

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I'd be one paying with little/no chance of getting any back...at least it's not in my retirement plan.

Fuel for driving to/from work. Just over 18mi round trip to work and $3/gal right now...~$19.30/week for work. On average about 15gal for the boat on the weekend (little less right now - working at the house) plus another 1 gal for the truck to pull the boat = ~16gal for the weekend. $48 for the weekend. The grand total is ~$67.30/wk for me.

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Although gas prices do suck, the media is blowing this out of proportion. Either that or the general population can't add or manage their finances worth a damn.

If you calculate it out you're not spending that much more UNLESS you bought a SUV or Truck or haven't invested in a car that has good gas mileage. Let's face it, if you're dumb enough to spend $50,000 on a truck that gets 11 mpg then you deserve what you get.

To spend an extra $100 a month on gas sucks, but if you can afford a house you should be able to afford an extra $100 a month.

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That's the way you should have your finances. If you live within your means you should be able to do just about anything. Obviously if you are making $35,000 a year but own a 60" Plasma, a $25,000 car, etc then you are in trouble. However if you have a 27" CRT like most people and a $10,000 car suddenly you have a lot more income to work with. Going out is probably not a problem and a $1/gal swing in gas prices isn't going to kill you. It might not even phase you.

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I am hourly and my hours flex, but right now i make ~$1800 a month. Roughly 22K a year if my hours stay where they are now.

And i have a car. 2001 Focus Sedan. (HATE HATCHBACKS)
I got a good deal from a family member, which everyone may not have, but its not like its not out there.

I pay for an apt, a car, insurance, food, elec., internet, and other smaller things. I seem to manage. but i couldn't imagine having kids...kids are money magnets.

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I'm sure wusy would manage.

BigMac

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When I was in Philly and NJ everyone out there had nice cars. So I asked around on how people could afford all these $70k and what not. People do good for a few months, then they buy, lose it all. It's a repeating cycle. I was amazed at how many cars were a few months old and already back up for sale because the people couldn't afford them.

People live outside thier means. Honestly, Ford doesn't really make a bad car, but they do make a good solid cheap car.

Kia. Honestly, they're not bad vehicles at all considering the price and features.

1800/mo isn't bad to live off. $900 every 2 weeks is a good chunk of change to make... but if that's before taxes, you're probably pulling in around $657. If you're putting 6% into your 401k (if you have it) you're pulling in $615-620 every 2 weeks, minus your health benefits, probably 20/chk, so you're making what, $600 in cash every 2 weeks?

That's easy to live off. You have your apartment, probably $450/mo, electic/gas: 80-100 dollars, cable: 35/85 with tv.. the rest goes to your gas, food and savings.

Not that bad.. plus you have a hell of a lot of cash around to go out and do stuff.

I did the math yesterday. I have almost $15k of debt. Student loans, sportbike, and a small $2,500 in credit cards on 1.9% APR. Not bad at all, shouldn't take long to pay off.

I hate to talk specifics on here since I kinda like some annonymity, but oh well.

My dept per month is:
$1149 rent (utilities included)
$50 parking
$30 renters insurance
$142 car payment (2002 Focus SVT. That makes 3 of us Focus people)
$160 (paid yearly so I'm guestimating) Car insurance
$120 gasoline
$160 student loans
$45 cable internet
Retirement and Health Insurance provided by employer.

You'll notice food is missing. I go out to eat a lot so I've kinda merged food into my entertaiment budget which at this point is whatever it is. I'm single.

I also have $2500 in credit card debt but that's only because I got a 0% one until April of next year. So I pay $50 a month on it instead of paying it off every month like I normally do. It helps my credit score so why not?

All in all, total is probably $2000 including food. That's probably close to $35K a year after taxes in salary. I'm guessing. So if I made less than that I would find another place to live or get a roomate or maybe a new job. Anything I make beyond that I have as disposable income for stuff like my monitor and my vacations. I'm trying to save a bit though so I'm not really buying much. I don't want anything either besides my vacations.

My point is that the way I have my finances set up I'm improving my credit score, saving money, spending money on whatever I want, and not worrying about much. If I made less money I could cut costs in the rent dept by getting a roomate and a smaller apt without a gym and other ammenities that I probably don't use anyways. I don't live beyond my means. To cut my food budget because of gas prices would be really stupid. Anyone who looks at a budget would clearly see that but these people must not be thinking twice about how their finances are setup. Then you have the kids factor. Having kids without being able to afford them is tough. You introduce a lot of expenses that you simply cannot reduce or elliminate. The only ones that you can really play with are housing and transportation.

I have a friend who makes $55K a year and is constantly broke. The fool owes me $100 even. It's really annoying. He's living in a nice place by the beach that his family hooked him up with for free (he might pay a few hundred bucks a month now), has no student loans, and is single. How can he be broke you ask? Well, he's spent $5000 on his garden. He's bought 2 cars in the last 6 months (don't ask, long story, he now drives a 1997 Kia) at a loss of $11K due to the interest and depreciation. He bought a hot tub and gazzeebo. He spent 3 weeks in Europe (plus a bunch of other weekend trips) and has trips planned for the future. When he bought his tickets for Europe it was originally for 2 weeks. He then decided to go for 3 weeks so he bought a whole new set of tickets. He bought a 2001fpw. He walks into a store and just buys whatever catches his eye. Now his place is pretty nicely decorated due to that I must say. I talked him into scuba lessons, he bought 2 surfboards, etc etc. He's living beyond his means. Not by much, since the car thing was just bad luck, but by enough to really be annoying. It's going to probably take him a year to get his act together.

Credit means a lot. I make sure I keep a good credit score since I watched my friends have $500 car payments due to crappy scores. I had a friend who just never paid his taxes, parking tickets, traffic tickets etc until his score was practically zero and he owed a ton of money that took him years and years to pay off. I'm so surprised how many people either don't know how to use a credit card or simply don't have one. I got one when I was 18 and paid it off every month which I would recommend everyone do.

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Good question, but one that doesnt get enough attention. Im not sure what the answer is but I am under the impression that even if the cost is obsorbed to some extent it will cause a shortfall somewhere else thus producing more of a long term effect.

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Interesting,

There is also a cultural component involved here. In the Netherlands it is very common to first save money, and then spend it. Of course we do have creditcards but they're not used for credit in general, but for payment convenience. Of course this is a general statement, we have people living in debt over here, it's just that somehow money awareness is more part of growing up and parenting here. Most parents have saving plans started up for their children, and then the kids learn to save money, put away some of their pocket money to their savings etc. It's just more part of our culture (trader genes I guess). I've observed some american families and I was just amazed as to how little financial awareness their kids had (of ages between 8 and 12).

It may be a Dutch thing rather than European because many countries in the EU have pensioning plans that are based on the current working class paying for the elderly of today, whereas Dutch pensioning plans are (in principle) based on saving one's own pension during one's working life. We have one of the richest pensioning funds in Europe, and i mean that in the absolute sense.



BigMac

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You can get just as work hungry to save the money before you buy it, so that's a non argument.

In the Netherlands (and a lot of other countries) credit cards are well spread since the early 90's. Not everyone has one, but we also have an intermediate form, basically a banking pass, that allows for shopping on credit, which is directly synced with your running account at the bank. A lot cheaper to get some credit on such accounts too, but they're usually very limited.

I'm a home owner so I have a healthy debt (not to mention that mortgage interest is tax deductable in this country , which is an advantage when you realize that we also pay a lot more taxes).

The advantage of the american system is that when the economic situation improves, you have a direct surge of spending while in a savings economy, this effect is slower. Still, once the savings have been well established the difference is minimal because people will start spending their savings when they find more money is left by the end of the month.



BigMac

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If you mean with the euro/dollar notes in my hand, right. But if you mean by directly transferring money from the bank to the recipient, sure, it is rather common where I live. I've never bought a car on credit in my life, and I've owned 7 cars upto now (some simultaneously). I realize that that is rather uncommon in the US (for newer cars, certainly).

BigMac

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It's cool to hear how things work over there.

Tax and PMI (Property Mortgage Insurance) is tax deductible in the US.

Since credit cards are somewhat new there, not sure if you're aware that we have Debit Cards here, which are directly linked to our checking accounts, kind of like your bank pass thingie.

Financial awareness over here does kind of suck. A lot of kids who grew up with parents that work and actually have a good income.. their kids tend to not concern themselves and know that their parents bail them out. Poor parenting? Possibly, but I think it's more on image over here so everyone spends just to show off to each other.

As far as cars.. You've always paid cash for your cars? It's not so easy for someone in the US to save 20-25k to buy a decent car in cash, age in consideration. I just bought my truck for 24k and it's on credit. I make my monthly payments interest free. Why you might ask? Because instead of saving the money up for 3-5 years, I can have it now and pay toward it. I have what I want/need now and continue to pay on it. What's the problem with this though? It becomes a problem when you start buying small items that you don't need. The only things I really think you should be in debt on: House, Car, Student Loans, big ticket items like that.
My credit card debt mainly comes from my college days when I had to buy books because I encountered problems with getting a loan and grants. I didn't make a lot of money, so I put it all on my credit cards to pay off later when I made some money.

In the US, Bad Credit is better than No Credit. Actually, it's not even recommended to put money on your credit card and pay it off each month. You should make modest payments over 2-3 months to pay it off. A credit card over here gauges your ability to assume debt and pay it off over a period of time, not monthly. That's not showing your ability to manage debt. Making minimum payments actually hurts your score because it shows you don't have the money to pay for your assumed debt.

I guess debt over here is something we're brought up to have in certain areas. We have PMI on our homes, which is insurance against our mortage/loan should we not be able to pay on it. PMI is taken off, which is normally like 80-100 dollars extra per monthly payment, once you get 20% equity in your house. You'd have to have 20k paid into a 100k house. You could reappraise your house to increase it's value, thus getting rid of the PMI also.

PMI is there because it's not common for someone to have 20k sitting in a bank account in the US. On average, I'd say most people have 3-8k sitting in their banks as a cushion for emergencies.

I personally have around $1,500 in my bank and stocks, but I also paid about $3,000 out a few months back when I bought my truck and sportbike. I'm rebuilding that nest egg, but in 2 months I get my bonus, probably 6k cash, which goes directly into savings, aside from about 2k that I use to pay off my credit cards. At that point, at 24 years old, I'll have my debt completely managed and probably live more like you do in your country, than what most people see the typical American living.

I know how to pay cash for a car, but it takes awhile to get there...

Average car now days will be good for at least 7 years, usually financed for 5 years..... When you pay off the car, you don't quit paying payments.... You keep paying the same payment you would have, only put it in a special use account... That way is stays separate from your normal accounts & you won't feel bad about spending it on a vehicle, that way!!!!

Now when your ready for a new vehicle, you've got 2 years worth of payments & the resale of the old car, to put down on a new one... Only this time, you finance for 4 years... If you drive it the same 7 years, now you have 3 years worth of payments to put down & the resale....

It takes about 3 cars to get there, but your 4th car should be bought in cash.... Then you pay yourself payments until it's paid off, & every car after that should be bought in cash... It does work well...

I've always found that little steps lead to big things.... [shrug]



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That is friggin' brilliant! The problem of course is if you decided to step up a couple notches. Then it's a bit harder. I did go for the 4 year loan though with this car.

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I don't really know many people that have ever bought a car with cash. I can think of one case unless it was an cheap old used car and even then it's usually financed.

Cars are the worst investment you can make so why put all that money up front on it? I think the mentality here is that not only can you buy a car NOW that you otherwise wouldn't be able to afford for several years, but even if you had the money now you could use it for something else like purchasing a home which is by far a much better investment. If you buy a car at a 6% interest rate but invest the same amount in a house that makes 8% (or in my area 20%), then it's by far a smarter investment.

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It wasn't exactly good parenting...my mom is a financial disaster, when she dies i have no idea what pile of shitt is going to be waiting for me. She is a pack rat and bad with moey. So i will have to deal with trash and debt...Sweet!

I would say when i was a kid i would save my money because i an kinda picky about what i buy. So i would save it and i realized you can save a lot of money without buying stupid stuff. I also work a lot so when you work you earn money, but you also dont spend it.

Now i am to the point where i am just used to seeing my paycheck and mentally breaking it up knowing i can only spend a certain amount till my next one. and i am pretty good about it.

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That sounds alot like my situation.

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I just talked to my father and he said I'm not touching it so I guess I'll just keep paying into it so that I can die someday.

I don't understand life insurance. Why not just put the money in the bank?

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You don't even have a job. What in the world could you be saving?

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