What Personal Finance Issues Does The Media Neglect

[markio26]

Re: What Personal Finance Issues Does The Media Neglect

oh another thought jeffrey.... our future generations will have to deal with the gravesites that are toxic waste grounds really... the embalming fluid seeping into the ground, the steel from the caskets, the wood, and materials, the huge cement and metal vaults covering the caskets that are sealed, the gravel, and such... my family are body donors and we wish to be cremated or freeze dried... i do not like the expenses asssociated with burying people.... it is done for the living.. not the deceased....i would not want to put my two kids thru all of that... when my dad died, my family of origin had two funerals in two states, and then the burial...

[markio26]

Re: What Personal Finance Issues Does The Media Neglect

another thought is the importance of having a will.... just look at the confusion in the media lately, from the anna nicole smith death, and the james brown death................ we made new wills and powers of attorney, medical power of attornery and such last year.... and it was expensive..... and this is another expense i do not see budgeted in anyones annual planning...

[markio26]

Re: What Personal Finance Issues Does The Media Neglect

also, i never see anyone writing about the 7 day hold that a bank puts on your deposit if it is over a certain amount.... bank holding periods i should say... makes like inconvenient if your trying to deposit money and pay a bill off promptly... it could be a homeland security thing... i don't know... i never have had anyone at the bank tell me??????????????????????

[scfr]

Re: What Personal Finance Issues Does The Media Neglect

Jeffrey - Here is my burning personal finance question that I have NEVER seen addressed by mainstream media (or anywhere else for that matter):

*****What percentage of one's total portfolio should be invested in real estate --- and by real estate, I am mainly talking about a primary residence (tho it would include investment properties, REITs, etc).*****

We see a lot of discussion about deciding how much house you can afford or what percentage of your income should go to your mortgage. And there is seemingly endless discussion (especially in recent years) about the direction the real estate market is headed.

But I don't think many people (including the financial gurus) sit back and ponder my question.

I have asked this question of a couple CFPs, I have asked this question at an on-line course on personal finance, and I have sent Emails to some financial gurus whose opinions I respect. The Emails went unanswered and the answers I got from the CFPs and on-line instructor were all "I don't know."

I came up with a percentage for myself (and I'd be happy to share how I did it if you're interested), but I could be WAAAAY off the mark and I would love to hear some "experts" weigh in on this! Given that so many of us invest such a large percentage of our net worth in our homes, I definitely think it is worthy of discussion.

Thanks, Jeffrey. If you decide to tackle such an apparently difficult question, I applaud you!

[disneysteve]

Re: What Personal Finance Issues Does The Media Neglect

What percentage of one's total portfolio should be invested in real estate --- and by real estate, I am mainly talking about a primary residence

I think that is an impossible question to answer because of the nature of the investment. Let's say that 5 years ago I bought my primary residence and, thanks to market conditions, it has now doubled in value. Sure, it is a much larger chunk of my holdings, but so what? Am I supposed to sell it and buy a cheaper house to rebalance the portfolio? That certainly isn't a practical answer. I could take out a home equity loan to decrease my equity, but that doesn't make sense either.
I think that once you buy your home, its value is essentially irrelevant until the day comes that you decide to sell it. As long as you didn't overextend yourself to purchase the home and can comfortably afford the payments and upkeep, I think you are all set.

JMHO. Sorry to go OT Jeffrey but I wanted to address this.

scfr - Why don't you start a new thread with this question and see what others say?

[scfr]

Re: What Personal Finance Issues Does The Media Neglect

I think that is an impossible question to answer because of the nature of the investment.

But we have target percentages and rebalance our portfolios in terms of stocks and bonds and cash ... why not real estate, since it's a fairly large portion of everyone's net worth? And tho' it's completely impractical to move each time the value of your home gets more than 5% away from it's target percentage (maybe we should all have a target range rather than a strict percentage?), isn't it something all of us should think about any time we buy for the first time, move, are thinking about upgrading or downgrading, experience a major financial setback or windfall, when we become empty nesters, as we are nearing retirement, etc? And if we choose not to upgrade as our net worth increases, should we at that point think about an investment property or investing in REITs? I guess my point was that there is so much focus in the media on how much house you can afford or what percentage of your salary should go to your mortgage or where the market is heading, when maybe we should be thinking about percentage of net worth as another part of the equation.

scfr - Why don't you start a new thread with this question and see what others say?

It was awhile ago but this question was included in the first thread I ever started on this site:

http://www.savingadvice.com/forums/showthread.php?t=22053

[Scanner]

Re: What Personal Finance Issues Does The Media Neglect

You know, when you really look at it - a house isn't really an investment. It' an expense.

The costs of owning a house:

Mortgage Interest: provided you don't pay it off early, somewhere in the neighborhood of 150K.

Repairs over the years: let's be conservative and say $20,000

Taxes: Let's be conservative and say you own the house for 30 years and have $4000/year in taxes - $120,000

Insurance: Let's be conservative and say $500/year for 30 years = $15,000

I'll even leave out furniture and other costs.

So, that's a grand total of $305,000 over 30 years you spend.

The average house in the US is now worth $265,000.

All said and done, you've lost money by the time you are done with it.

[disneysteve]

Re: What Personal Finance Issues Does The Media Neglect

But we have target percentages and rebalance our portfolios in terms of stocks and bonds and cash ... why not real estate, since it's a fairly large portion of everyone's net worth?

There is a big difference between investment real estate and your primary residence, at least in my opinion. I didn't buy my home as an investment. I bought it so I'd have a place to live. Yes, I hope that it will grow in value, but that is only a secondary benefit.

I can rebalance investment property I own by selling a condo or a 2nd home. I can rebalance my real estate mutual fund by selling off some shares and not adding any new money to it. But I can't rebalance my home. I can't sell off the family room and keep the rest of the house. If it grows in value, it grows in value. I don't let that affect my other investment decisions, though.

[tinapbeana]

Re: What Personal Finance Issues Does The Media Neglect

So, that's a grand total of $305,000 over 30 years you spend. The average house in the US is now worth $265,000. All said and done, you've lost money by the time you are done with it.

error in logic: you're comparing the total the house has cost over 30 years to the average value of a house today, as opposed to the calculated average value of a house in 30 years. to determine and actual profit or loss from the house, you would calculate total invested (305k from above) and the total return (price received when sold)

Taxes: Let's be conservative and say you own the house for 30 years and have $4000/year in taxes - $120,000

Insurance: Let's be conservative and say $500/year for 30 years = $15,000

maybe it's just me and my area, but these 2 numbers don't jive: my homeowner's is $650/yr and my property taxes were $550 in december. would they have been much higher in NY or CA? of course. would i have bought a house in either of those states? nope.... those taxes are the price you pay for living in 'highly desireable' areas...

[PauletteGoddard]

Re: What Personal Finance Issues Does The Media Neglect

Managing in HCOL areas on middle-income, especially where child care for infants ranges around $1100-$1200/month.

How to negotiate down the price of a car at a dealership.

What retirement will really look like ten, twenty, forty years down the road when energy costs go up 10% a year.

Oh yes, and debt situations that don't magically go away through execution of stock options and inheritances. I've had it up to HERE with "Rohit works as a VP of Engineering at a dotcom in Palo Alto, and Rashmi has a Ph.D. in Genetics and works at a biotech company. They have four properties and a nanny and are wondering how to manage their monthly caviar and Dom meet-and-greets." Oh sure, that is SUCH A TYPICAL AMERICAN FAMILY.

[LuxLiving]

Re: What Personal Finance Issues Does The Media Neglect

Okay Paulette, I'd agree, but let us not forget those of us in Low COL areas on what USED TO BE middle incomes who are fast becoming the working poor. How to at the end stages of working life keep up with those dam* Joneses at the very least on the utilities & food side of the equation - they can keep their McMansion, Land Rover & Hummers, no problem - but the rest of us would still like a little heat/ac & some food that a WORKINGman can afford for his family. Not a corporate working man but a blue collar worker.

Who has the energy left after worrying about the above two issues of utilities & food to even get to the laughable health-care crisis we are fixing to retire into!???! Not us - OH MY!!!!!!!!!

[Scanner]

Re: What Personal Finance Issues Does The Media Neglect

maybe it's just me and my area, but these 2 numbers don't jive: my homeowner's is $650/yr and my property taxes were $550 in december. would they have been much higher in NY or CA? of course. would i have bought a house in either of those states? nope.... those taxes are the price you pay for living in 'highly desireable' areas

Tina,

Okay, if the house is let's say worth $450,000. . . hey, I could throw utilities in there too over the years - the house is going to have to be heated and cooled, no? At least minimally? No matter how you punch the numbers, a house is an expense in the end.

In a way, Kisoysaki is correct - we are just living on borrowed land - the gov't actually owns it.

Okay - the homeowners ins. was a round estimate - I pay $500/year, you pay $650. . .close enough, those numbers jive.

Now, your property taxes were $550 for a quarter - so that's $2200/year. I am not sure the value of your house or perhaps you live in Racoon Butt, Mississipi or something but here in NJ or even my parents in suburban PA, that's not going to fly unless maybe you own a 2BDR/1 BA. type of house.

And maybe that's what we all need to do. . .debatable I guess.

Now. . .some states trade low property taxes with high state income tax so. . .there could be an accounting shift there, appearing to make your home more valuable - you do have a point there.

I"ll admit I do own a McMansion and our tax burden, whether rightful or not, is higher than average - we pay $8000/year on 2600 square feet of house (4BDR/2.5BA). So, I think my estimate of $4000/year was pretty on. I think it was actually conservative for anyone at least wanting to be somewhat upwardly mobile.

I don't think NY, NJ, CT, PA, MD, or even DE has taxes that low.

[tinapbeana]

Re: What Personal Finance Issues Does The Media Neglect

Now, your property taxes were $550 for a quarter - so that's $2200/year. I am not sure the value of your house or perhaps you live in Racoon Butt, Mississipi or something but here in NJ or even my parents in suburban PA, that's not going to fly unless maybe you own a 2BDR/1 BA. type of house.

Now. . .some states trade low property taxes with high state income tax so. . .there could be an accounting shift there, appearing to make your home more valuable - you do have a point there.

I"ll admit I do own a McMansion and our tax burden, whether rightful or not, is higher than average - we pay $8000/year on 2600 square feet of house (4BDR/2.5BA). So, I think my estimate of $4000/year was pretty on. I think it was actually conservative for anyone at least wanting to be somewhat upwardly mobile.

I don't think NY, NJ, CT, PA, MD, or even DE has taxes that low.

scanner, my property taxes were 550 for the YEAR, not a quarter... 1800 sf 3 br 2 ba on a fifth of an acre, half a mile from a park, zoo, and 2 miles from shopping.. but this is where the COL comes into play b/c while i live 1 mile from a downtown center, it's in SC (low COL) not atlanta or phillie or NYC or LA or san fran or yadda yadda yadda...

on the plus side, even though the COL is easily half of what it is in other areas when it comes to housing, there's not a corresponding 50% decrease in salaries. therefore, i probably make say 80% of what i would doing the same job living in atlanta (been there, done that), but i'm easily paying half or less for my house and property taxes.

[ChimbleySweep]

Re: What Personal Finance Issues Does The Media Neglect

also, i never see anyone writing about the 7 day hold that a bank puts on your deposit if it is over a certain amount.... bank holding periods i should say... makes like inconvenient if your trying to deposit money and pay a bill off promptly... it could be a homeland security thing... i don't know... i never have had anyone at the bank tell me??????????????????????

This website explains all about Regulation CC. Please read it; I encourage everyone who has a bank account to do so. http://www.federalreserve.gov/Pubs/regcc/regcc.htm

[PauletteGoddard]

Re: What Personal Finance Issues Does The Media Neglect

How to at the end stages of working life keep up with those dam* Joneses at the very least on the utilities & food side of the equation - they can keep their McMansion, Land Rover & Hummers, no problem - but the rest of us would still like a little heat/ac & some food that a WORKINGman can afford for his family. Not a corporate working man but a blue collar worker.

Who has the energy left after worrying about the above two issues of utilities & food to even get to the laughable health-care crisis we are fixing to retire into!???! Not us - OH MY!!!!!!!!!

The mass media invisibility of the bottom 80% of American income earners irritates me too. "Let's write for a fifth-grade reading level but target our content to an audience earning $200,000 a year." I have a university degree: what do I have to do to earn the 'typical-in-the-eyes-of-mass-circulation-periodicals' sum of $200,000 a year that someone with a fifth-grade reading level supposedly has? Oh wait, let me guess: "MARKETING" or "REAL ESTATE."