Somehow I lack empathy for these people hit by the recession

Parent Cafe
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<p>“We stayed in mid-town this past summer for about $360-$380 a night. But it was about $440 after taxes I think. It was a nice room with two queens. They gave us a big discount on the room - I think the normal price worked out to over $500 after taxes.”</p>

<p>I was in NYC twice this year. Once, I stayed in Newark. The other time, I stayed with a friend, a retired office worker who has a tiny two bedroom walk-up in which the bathtub is in the kitchen. She has lived there for at least 40 years, which is why she can afford it.</p>

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<p>“Are people making $85k or $65k living in rat infested apartments or on the streets?”</p>

<p>Or they have rent control, or they inherited a place that wasn’t worth too much when their parents/grandparents bought it in 1950.</p>

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<p>I think the article was written tongue in cheek. I don’t “feel sorry” for the well to do in these times, but it does scare me. Their hardships and scrimping do not trickle down to the lower economic brackets but either come in a big rush or a near total turn off.</p>

<p>We live in an area that has both extremes. We have some of the most expensive housing in the country/world, and at the same time have illegal aliens renting out cots and sharing tiny apartments. There is a lot of fear at the work lot these days. With the end of building,construction, improvement, the workers are getting no work. I have a housekeeper one day a week who asked if I could give her more hours. She has had her hours cut by her other employers, and frankly, I was thinking of just having her every other week, now that I am down to two kids at home. My neighbor reneged on her commitment for private schools for her twins, the school went after her but lost since the kids were preemies who have some borderline special needs and the decision went for my neighbor. They are in the public school that is squeezed this year since it appears that they are not the only ones who decided to save on tuition. The private school where my son goes is down 30% in enrollment. We really should buy cars this year and ordinarily would as we are going on a car with 175K on it and my son’s old stick shift clunker. We’ve decided to see how things go in the spring. We no longer bring the cars to the dealer but to good ol’ Ed at at service station who needs the business as he has not benefited a whit from those high gas prices. Business is way down for him and he is beyond retirement, had hoped to sell this year, but no takers, cuz no credit out there. I did not buy any Halloween stuff this year, nor will I buy any other holiday decor and am skipping the boutiques and other shows where I used to buy gifts. We will be lean on gifts this year. Sons are not coming home for Thanksgiving and I am using our free turkey for ourselves. In fact, I already have most of the Thanksgiving stuff together. I have not spent a penny except for necessities in the last two months except for one luxurious trip to Trader Joe’s. I did not renew my Barnes and Noble card. I only bought one raffle ticket for all the fund raisers that are happening. I am cutting down low on my charitable contributions. </p>

<p>My friend who is very well to do and usually extravagent decided not to redecorate this year. No tears for her from me but I am sure the suppliers and decorators are devastated. That is a huge chunk of change that is not circulating right before the holidays. She usually custom orders a huge tree for Christmas that she has the lights put on and the house illuminated with lights, and this year she will do it herself. She will not have the annual tree trim party catered. Several small businesses that have gotten that money each year will not be getting it this year. Some have called and offered services to her at half the price. She has decided not to buy a cello for her daughter after all. She and her husband went out every week to dinner. Now once a month and the same with the family night out. She has ample room to cut down on expenses, and actually so do I. But every cut we make affects those who were depending on our spending and make a living out of it and do not have as much fat to cut. </p>

<p>H’s colleague had son’s take out max unsubsidized staffords this year and took out PLUS loans as well for college, when they usually paid full freight from their bonuses. They are running scared. If enough people are doing this, money is going to run short for everyone, but those at the top of the heap have more options. </p>

<p>When families that are ordinarily looking for a house to buy, decide to stay in rentals that are simpler and more frugal, that housing option is filled for those who could not have bought. Also anyone needing to sell right now is up the creek. Friend who is a realtor told me three closings did not go through last week because the banks balked at the last minute. THEY (the banks) are holding onto that bailout money,it seems to me. My friend bought two house dirt cheap from elderly who HAD to sell, and is renting them out at a premium to those who can’t get mortgages and ordinarily would have been buying, maybe would have bought those houses had credit not been so tight.</p>

<p>I don’t gloat at the cuts the wealthy are making, because for every dollar unspent, there are those who really needed it lower on the income scale.</p>

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<p>Must be something to that “trickle down” economic theory after all.</p>

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<p>Very nicely put. Around the office, one guy just bought a $400K condo and is moved in. Had no problem getting a mortgage and is only the slightest bit queasy about the economy. He’s followed all of the housing bubble news for a year so he knows the landscape but he put down a large down-payment and his income is pretty secure.</p>

<p>I know of three in the office that just bought new MacBook Pros and they loaded them up so that’s probably $2,500 to $3,000 in hardware. Of course one of them had been using an Apple from the mid-1990s era so he doesn’t exactly upgrade very often. We have a lot of frugal yankees in our area and they save and save and save and feel no guilt or little concern about buying things as they have a lot of savings.</p>

<p>It’s pretty popular sport to beat up on the wealthy and some of them deserve it. But those are for specific acts. Treating them all like villains has never made sense to me - seems like discrimination in the same way racial, religious, gender discrimination feels to me. It’s just another class that’s easy to be jealous of or pick on. They’re people too and have the same emotions and responses that we do but at a different scale.</p>

<p>I had lunch with a hedge fund manager once - I knew him from a trading board. He talked about what he did and he said that he’s just like me when making trades. But he’s just operating at a much bigger scale. He can’t buy little stocks like I can because he can’t get out if he needs to. So sometimes the little guy as advantages over the big guy.</p>

<p>I was at the mall in the Prudential Building in Boston a few weeks ago. It’s a really upscale place and there were loads of shoppers with purchases in hand. Lots of European and Asian tourists there. But I look around at local businesses and it appears to me that they are suffering. The places doing well are discount stores.</p>

<p>Deflation stinks a lot more than inflation does. There are always more opportunities in inflationary times than deflationary times.</p>

<p>Son got his Bio mid-term back and he told me that the Prof said that this is the strongest class that they’ve had in quite some time. I attribute that to the deteriorating economy as stronger students skip the better (or more expensive) private schools and head towards publics. I expect that there will be a flood into publics as do the profs. They’ve warned those already in to get in early for advisement and enrollment for next semester.</p>

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<p>Beautifully said, cptofthehouse. That’s one thing people don’t always realize - all of this is interconnected.</p>

<p>I remember back in the 60’s (yes, I can remember that far back), the students at Columbia University protested the treatment of the workers who cleaned their rooms (at the time, students had maid service in the dorms), saying that the work was demeaning to the workers and they should not be forced to do it. Outcome? The University said, “you’re right, you can clean your own rooms,” and fired the cleaning staff. The student reaction? “Oh, we didn’t mean that! We want you to give them other work!” Yeah, right.</p>

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<p>Well said cpt. Of course there is something to the trickle down. I have noticed lots of similar scenarious to cpts in our area.</p>

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<p>Trickles, are one thing. Droughts are another. </p>

<p>However, I can tell you that I do sympathize for anyone who loses the family home despite the mistakes made in selecting it. When this happens, not only is it a private trauma for the family involved, but it dramatically affects many others. </p>

<p>We’ve been cutting back drastically this year coming off of a very expensive year when we had both grandmoms with us who had a lot of needs and wants. We are also now down to 2 kids at home. In a better market we would have this house for sale as it is now way too big for us as things have changed in our situation. We are very, very fortunate that we can hang on to it. However, with 4 tuitions we are paying and other expenses, we are on a tighter budget. The thing is, I can see how that hurts others, as we cut back. I usually support our Christmas bazaar and buy all sorts of things for the holidays there. The money goes to the school and some charities, as well as to the many vendors, most of whom are not wealthy. When sales are low at these things, they all suffer. Our school let two teachers go due to lower enrollment and cut the staff’s benefits. Also, the librarian was let go, and the position is now being filled by mother’s club volunteers. We are having a pot luck evening at our house for the football banquet rather than using a restaurant. We usually have an autumn party, and this will take the place of it. Think of the businesses and people who are losing out from these simple moves.</p>

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<p>My brother and his wife live in a nice area in Manhattan. Their apartment is truly student ghetto quality, but the price is right. My son could not afford to stay in the NYC area and live independently. He tried for 2 years. He is now upstate, in a similar job, slightly less pay but lives in a very nice affordable apartment. It’s tight for him but doable. The numbers did not work out here in the NYC area. </p>

<p>With credit so tight in this area, rentals are becoming scarce. There are still folks moving in here who need a place to live but cannot buy at this time. Those who are in the position to rent out ( I am considering this) or finance the mortgage for the next 5 years, have some wiggle room, but those who need the payoff are out of luck and suffering.</p>

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<p>One of the financial advisors that I listen to has talked about the potential for a booming private loan market where the lender knows the borrower personally and just charges a reasonable rate of interest. It’s kind of like lending before computers based on history and character. The idea intrigues me. Someone at the office wanted to borrow $100K at 5% for 20 years for cash flow purposes as he has two in college. He has that rate for 10 years right now and just wants a little more flexibility. I thought about offering to do the loan because I’ve worked with him for 20 years and the amount is trivial in comparison to his assets. It’s just that the banks want a certain rate of return on their investments that I don’t need. At any rate, it’s just something to consider for spare cash.</p>

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<p>5% is too low to lend for 20 years.</p>

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<p>If you have the money to lend out, you are sitting in a good situation. My realtor friend just recently bought some houses for very little money, waay below what market should be for these houses , because they HAD to be sold. She is charging exhorbitant rent, in my opinion, and is getting it. The renters were so desperate to move in that they did not even want to wait for some freshening up and fixing of the houses. They paid first, last months rent plus security deposit. I am told I can rent my house out for more than the mortgage, and if I can work out a deal with someone trying to sell their home desperately right now, I can get a good price, and maybe work out a 5 year private balloon mortgage with them, especially if I can come up with a hefty down payment. The deals are out there BCEAgle. But every deal has its risks.</p>

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<p>My brother is renting out his house in California for a very nice profit each month. They have decided to continue renting it, and are looking to buy a second home since they have the money for a hefty down payment. I would not mind selling my house at the right price for a hefty down payment and a 5 year balloon mortgage that I assume rather than relying on the banks coming up with the money. In fact anyone who is selling these days is holding his breath about mortgage funds. Any little thing is getting the banks jittery here.</p>

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<p>I don’t want to be a landlord. That said, I know a guy that’s incredibly successful at it. He’s also an engineering manager. He buys low (low-ball bids when real-estate is in the toilet) and does most of the maintenance himself. He has lots of bad-tenant stories. My wife’s relatives are wondering why I don’t buy stuff in asia where rentals are still in very high demand.</p>

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<p>Neither do I, BCEagle. I have backed away from that situation many times in the past because of that. But right now I am living in a big expensive house, that is not going to unload easily. According to realtors, I can rent it for close to double the mortgage, and get first, last, double security depostit. THat would give me a hefty amount to put down on a smaller house around here where someone HAS to sell. Getting a deal on that would really make a difference as my biggest expense right now is this house, that I had hoped to put on the market. Nothing is moving here, and the advise is not to even bother, unless I have to sell. I have a good realtor friend who is in the local scene and would show my house if she got a whiff that someone was looking for something like this, just on an informal basis. No such scents. I am so upset with myself that I did not put the house on the market earlier this year. I’ve gone over the numbers, and it looks pretty danged good, if I can find a house I want at the right price, and the chances have never been better for that. When we moved here some years ago, we had difficulty getting anything as the market was not only steep, but houses were being snatched up the minute they were shown. You had to move fast to get anything, and we could not do it because we were from out of town and did not know the areea or anything well enough. So we got this house really on a fluke, cost too much, not exactly what we wanted by a long stretch, but the best we could do having spent a year trying to buy. Now we know the local market, and can discern if something is a deal or not, and have the contacts in the housing field to help us. I am very tempted.</p>

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<p>If you can get a good renter, then I guess that it works. But I don’t know that I’d like to be carrying all of the extra equity. You could always rent your own place to live instead of buying. Our son rents his apartment. I did look at buying around the campus but there wasn’t anything that I’d feel comfortable maintaining and the renters are college students. After seeing the housing habits of college students, I’m not sure that I’d want to be a landlord for college students. There were a bunch of well-maintained and small homes with lots of young families but none of these were for sale (and I doubt that any would come up given the pride of the neighborhood that these homeowners worked for).</p>

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<p>I feel sympathy for a pregnant woman who already has one young child, is battling cancer, and has to worry about whether her family will continue to have insurance (via her husband’s tenuous employment). That would be a very stressful situation.</p>

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<p>Being a landlord for student housing is a fulltime job. Though there are risks that you get a bummer as a renter regardless of what you are renting out, if you have decent coverage with the security deposits and advanced rent, you are decreasing your risks. Especially if your mortgage is well covered by the amounts. The problem around here is finding a rental. As financing as dried up, people cannot sell their homes even at a discount to willing buyers who cannot get mortgages. The cost of housing here is such that getting a jumbo mortgage is often necessary, and those have always been a bit more difficult to get. Now nearly impossible. Plus you have buyers who have a house they are renting out that they cannot sell. Sometimes the only way out is by renting your own house, if it more than you want, and buying with a sweet deal something cheaper. I’m sure easier said than done. If we do it, I’ll let you know. But I do know some folks doing this and coming out doing very well financially in these tough times.</p>

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<p>I have sympathies for anyone who has obligations and now is in a shaky financial situation in terms of meeting them. Agreed there are levels of sympathy. Certainly those “stuck” in a nice apartment are in no where near the trauma that families who are losing their homes with no decent place to go. That is a true problem. </p>

<p>Anyone have any good ideas about what to do about the many homeowners who bought houses with terms that they could not meet. Though I agree the consequences are a result of not taking due care, the problem is so widespread now that it is endangering all of us. What can the government do to alleviate this situation? It seems to me that the banks have taken the bail out cash here and are sitting on it to make their own profits.</p>

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<p>Sort of a sidebar, but the cost of living in NYC is overrated when people assume it runs in the prices that tourists pay when staying in midtown. I used to live there. You can’t compare the cost of VISITING there to cost of living. </p>

<p>Granted it is more expensive than elsewhere, and housing can hit you hard. But that aside, day to day living is not like visiting Midtown. Restaurants we frequented, not in the tourist district, were typically no different than anywhere else we’ve lived. We didn’t need a car. Same with buying groceries or clothing- you know where to go. </p>

<p>I think its hard for anyone downscaling, no matter where your ‘normal’ is. Its just human nature. So I have some empathy. But people adjust. And it just might be that those going from everything to average, its a good thing for them once they get used to it. </p>

<p>I wonder how many divorces might happen. I know of some women who married for the lifestyle. I wonder if they stick it out when the lifestyle is gone.</p>