<p>people are just living way beyond their means and expecting the government (other tax payers) to pay for it.</p>
<p>How does that work exactly?^^^^^^^^^</p>
<p>
Borrow as much as you possibly can, then if paying the debt is not worthwhile, find a way for someone else to take the loss and/or bail you out. For example, the guy I bought my home from was able to borrow ~$800k more than he originally paid for the home, when home prices/values peaked in 2006, then when home prices declined over the next few years, he owed far more than the home’s value. He stopped making loan payments, then a few years later, after they started moving towards foreclosure, he sold the home as a short sale. When I bought the home, the former owner owed ~$600k more than the the price I paid. The bank handling the loan agreed to take the ~$600k loss, so the former owner was able to borrow ~$800k without paying it back. I’d expect the majority of bank’s loss ultimately was passed on to consumers. In my state, ~20% of home sales are underwater short sales or REOs. This is down from more than 40% a year ago.</p>
<p>Regarding cars … I am currently shopping for a new SUV/crossover with 4 wheel drive (all wheel would do too)</p>
<p>I’m finding that for what I think I want in terms of cargo, passengers, gas mileage, toys etc that all of them cost about the same. A bit more for the BMW, a bit less for the Ford, but very manageable bits.</p>
<p>Referencing the rest of the thread – my husband and I saved a lot of money, did well with a few real estate investments, and inherited some chunks of money that’s since been invested. On top of that, he picked a company 20+ years ago and worked really really hard and it paid off. He makes an excellent salary – and he is the guy you’ll see coaching the sports team in the afternoon <em>and</em> driving his Beemer. He earned that time off to coach by serious hard work over a period of years and his company allows him the time for 10 weeks in season. I drive a BMW also – and I can tell you the pet shop is not paying for it – although my car allowance helps!</p>
<p>Data10, that doesn’t sound like a very good long term strategy, not the way job offers, insurance premiums and rental agreements are contingent in having a good credit score.
You may have gotten to live in a home bigger & more expensive than you could afford for a time, but who is going to take you in when that strategy falls apart?</p>
<p>^^emerald, data didn’t mean that was his strategy, but the guy he bought the house from. Data’s strategy of buying a great home for a deal is an excellent one.</p>
<p>
Yes, I was talking about the former owner, not myself. I closed on the home on the day before it went from short sale to foreclosure, which allowed me to get it significantly under market value. I don’t follow the same borrowing as much as possible strategy as the previous owner. Instead the home is paid off without a mortgage/loan.</p>
<p>One way to start off on the right foot is to try to graduate from college with little or no debt, and to live within your means. Many of the people who are coaching in the afternoons and who drive expensive cars have worked very hard over the years to get to that point. On the other hand, many are just living way beyond their means and it will eventually catch up. </p>
<p>We live near an area that has a large number of migrant farm workers. When I drive by the fields where they work, I have noticed that many of them have much nicer cars than I do. Many of these people live in small houses with 10 or 15 people sharing the space. Culturally, having a nice car is very important for many of them, even though they have few other material possessions. You can’t judge anyone’s wealth based on what they drive. </p>
<p>My D and SIL are in their late 20’s. She finished her undergrad and master’s w/ no debt, and he is currently finishing his master’s with small debt. They existed on 1 car for 2 years, and then found a 2nd car used for $1200 (we do not have good public transportation here and it is tough to get by w/o a car). They do not have cable TV or any other extras. They do have a house they bought 3 ago, and they rent out one of their rooms to a friend. They are extremely frugal in daily life, but have managed to travel extensively. They also have managed to save quite a bit. I predict that in 15 or 20 years they will be quite comfortable in their lifestyle, because they work hard and have made some small sacrifices for now.</p>
<p>I dunno, it beats me! I went to the home tonight of one of my son’s classmates, and I felt like a real loser, money wise. They have a very fancy large home in an expensive gated subdivision. The father has his own small business, the mom doesn’t work. My husband and I both work like dogs, but are in relatively low paying professions. We have an old kitchen badly in need of remodeling, a leaky roof and older cars. But then again, my oldest is in law school at a top school, daughter is incoming junior at a very selective university and son is a senior applying to all very good schools. I have smart kids, not much in the way of material possessions, lol. I’ll take the former over the latter. And hopefully my kids will buy me a nice little retirement cottage when they make more money than I do, lol.</p>
<p>I haven’t read all the responses, so forgive me if this has been said. </p>
<p>Where do they get all that cash? Why not ask them? I’m sure most would be happy to tell you, especially if they somewhat know you (kid from the neighborhood). </p>
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<p>The second question to ask them is “What makes you happy?” I bet they don’t mention money. Family would likely be the leading answer, don’t write off that spouse and kids just yet.</p>
<p>Ah, yes, I think it is you. It always depends on where you live. Say, if you are a child to a wealthy business family. You’ll grow up surrounded by upper middle class men and women. Your reality is very limited.
I grew up in lower middle class area and a lot of the girls in my school get pregnant, one from my 10th grade was pregnant for the second time, and the best car any kid had was a used truck. Then I moved to an upper middle class area and go to a school where the worst car is a mom’s car. </p>
<p>You have to be careful of what you judge based on your experience because it can sometimes be very limited. There is more out there and I think what you said is not the most common. I think the “average” is similar to what I grew up with, probably better than that. DO you live in an upper middle class area or nearby? The place I’m in right now; if I grew up here, I’d think “Why is everyone so worried about the economy? Everywhere I go, every kid has a phone and a nice car and they all have nice houses. I don’t see the problem” Why would I say that? Because the majority of the idiots in my new school thinkg that! Why? Because they are rich</p>
<p>BUT, to answer your question; a job. And honestly, they don’t get “all that cash”. They struggle a lot with money, the average that is. The only adults who don’t have a big issue with money, are the adults who don’t have kids</p>
<p>Regarding the comments about favoring German cars (BMW, Audi, Porsche), I live in an area with one of the highest per capita incomes in the US, where most have 7-figure houses. While walking my dog today, I took note of how many of different car makes I saw on property (not including cars on street). Totals are below. I’ve only included makes with at least 3 cars</p>
<p>Toyota – 28
Honda - 23
Ford – 18 (one was a GT)
VW - 10 (majority were VW bugs)
Lexus - 9
Acura - 7
Mercedes - 6
Nissan - 6
Chevy - 5
BMW - 4
Audi - 3
Cadillac - 3
Infiniti - 3
Kia - 3</p>
<p>The big 3 were Toyota, Honda, and Ford. This matches exactly with the Experian survey I mentioned earlier, which found those being the 3 most common car makes for persons with a $250k+ income.</p>
<p>If you live in a place that has horrible traffic or is otherwise not conducive to a lot of driving, buying an expensive car may be pointless for many people… In my neighborhood and city overall ( a wealth suburb of a good size Midwestern city) the types of vehicles one sees are far different than the above list. Lots of German cars, Japanese luxury cars, domestic SUV 's and so on.</p>
<p>My neighborhood list is different as well. Range Rover, Porsche, Mercedes, Audi, BMW, Lexus, Jaguar, Chevy Suburban or Ford Tahoe are the 99%. The 1% are either Aston Martin, Ferrari, Lamborghini, Tesla and a few other exotics, or Honda, Toyota, Hyundai.</p>
<p>My neighborhood is like Alma’s except a crap load of Hondas, Hyundai, and Toyota’s. the amount of those three are probably a little less or equal to the amount of "Range Rover, Porsche, Mercedes, Audi, BMW, Lexus, Jaguar, Chevy Suburban or Ford Tahoe"s. There are some really nice exotics. One day took a long time opening the gate just so I could get a better look at it. :p</p>
<p>No Volvos? We have three in our driveway.</p>
<p>No Peterbilts?! My neighbor has one - drives it daily and parks it overnight in his driveway leading to his 5-acre property. 
He must be very rich - with all that shiny chrome, that thing costs more than a Beemer or a Tesla!</p>
<p>In my town, we have the “haves”, and the “have-mores”.</p>
<p>The next town over is really rich though. In the center of town is a mechanic, and there are always 10 or 12 Ferraris parked outside when I drive by. I heard he charges $150/hour for labor.</p>
<p>Moral of the story is, become a Ferrari mechanic.</p>
<p>I can guarantee you, I “have more” dirt and dings on my vehicles than any of these people. The mountains don’t take well to fancy sports cars</p>
<p>I wonder if that’s why even in very wealthy areas of my town, the vehicles of choice are SUV’s and Subarus (not sure if that’s considered an SUV). In fact, one of our suburbs has the ninth wealthiest zip code in the US, and the top five cars there are all SUVs or minivans.</p>
<p>It’s not that hard to understand why not all wealthy people have luxury vehicles.</p>