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Old 02-07-2013, 09:43   #51
devildog2067
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Originally Posted by GAFinch View Post
All the good paying manufacturing jobs have moved to Mexico and then to China
No, they haven't. The US manufactures more stuff now than it ever has, by absolutely any measure. Manufacturing jobs pay more, on average, now than they ever have.

The difference is that many of those jobs require skills--robots have taken over the unskilled parts of those jobs. There aren't many "good paying" unskilled manufacturing jobs anymore, and frankly, that is what it is. The era of being able to get a "good paying" unskilled job in America was a historical accident, nothing more.

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Old 02-07-2013, 09:56   #52
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Originally Posted by devildog2067 View Post
No, they haven't. The US manufactures more stuff now than it ever has, by absolutely any measure. Manufacturing jobs pay more, on average, now than they ever have.

The difference is that many of those jobs require skills--robots have taken over the unskilled parts of those jobs. There aren't many "good paying" unskilled manufacturing jobs anymore, and frankly, that is what it is. The era of being able to get a "good paying" unskilled job in America was a historical accident, nothing more.
But what about the actual number of jobs in manufacturing?

Output per person is way up so I would think less people work in manufacturing which is what everyone really means when they talk about manufacturing. It is down, ie less people (ratio of workers to population etc..) able to work in manufacturing etc...

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Old 02-07-2013, 10:15   #53
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LOL. I picked up the wrong graph from a different article. Hang on. Having a bad day I guess. but the SD graph does have a long term upward trend.
Most of the graphs aren't up to date, aren't showing the recent down turn so I don't want to post them.

But overall, a very slight, but increasing of the ratio of housing prices to income is what I am seeing. Not anywhere as severe as the markets I am familiar with. Plus the downturn in housing prices may not be over so who knows, it could flatten out some more.

Something else that is interesting is a lot of the graphs I see where the ratio is about the same use household income. If more families are 2 income vs 1 income families then the actual "cost" to a family to afford a median home is much more.

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Old 02-07-2013, 11:03   #54
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But what about the actual number of jobs in manufacturing?
As you suspect, it's down. Your reasoning is correct.

So what?
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Old 02-07-2013, 11:12   #55
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As you suspect, it's down. Your reasoning is correct.

So what?
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Old 02-07-2013, 11:45   #56
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Not true. Depends where you live.

I know plenty of houses/locations in SoCal (where I was born and lived for over 30 years) that where built in the 60's, where very middle class affordable back in the 60s on 1 income families and now cost 600k+. I don't think getting rid of your TV/Cell phone/1 car is going to make it affordable for a 1 income middle class family.

When my wife and I graduated we where able to afford a nice house in SoCal on our entry level salaries. Today, that house costs 3 times as much, 600k+, and entry level salaries for the same positions are almost exactly the same as they where 15 years ago. No way we could afford that house today if we just graduated.

Even if we get rid of TV/Cell Phone/extra car, it still would not be affordable and this is on 2 incomes not 1.

Cost of living vs income is definitely worse today compared to 15 years ago and as well as when my dad was my age even with the same standard of living.
Devildog did a fine job with the details. For the hammer answer...there were expensive place back then as well...and you need to understand what an average is.

We are also not talking abotu 15 years in this thread. You cant move the goal posts and then claim a point against the old standard.
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Old 02-07-2013, 11:51   #57
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It would only take one wage earner now....if such a person lived in the exact same way as a person did in the 60's.
Economically, middle class isn't a lifestyle.

It is economics and the numbers associated with it.

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Old 02-07-2013, 13:12   #58
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Google Section 179 depreciation. I am not sure current year 179 rules, but in past year you could buy (if you were a small business owner) a $70-100+ k SUV (as long as it was GVWR of over 6000 lbs) and take 100% write-off (lowering you taxable income by that amount) in a single year? Straight line depreciation means that you could take 20% each year for 5 years. Why buy "average" when you can go whole hog and get a better tax write off?
The car still costs a lot of money. Your write-off doesn't equal the cost of the car. The car isn't free. This strategy is really just a way to feel clever about buying an expensive car. There's nothing wrong with an expensive car but let's not pretend we're saving or making money by buying one.
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Old 02-07-2013, 13:32   #59
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The car still costs a lot of money. Your write-off doesn't equal the cost of the car. The car isn't free. This strategy is really just a way to feel clever about buying an expensive car. There's nothing wrong with an expensive car but let's not pretend we're saving or making money by buying one.
You are missing the point. It is possible to lower tax brackets (or even show a loss and no) tax with write offs. So, you can actually save much more than just the tax; you can actually lower tax brackets which can mean a LOT of tax savings.
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Old 02-07-2013, 13:39   #60
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You are missing the point. It is possible to lower tax brackets (or even show a loss and no) tax with write offs. So, you can actually save much more than just the tax; you can actually lower tax brackets which can mean a LOT of tax savings.

This is absolutely true.

And from the other side of the table, money is money, but a dollar "saved" (ie, not sent to the taxman) for some people is good money.
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Old 02-07-2013, 14:08   #61
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3. You are assuming a LOT of appreciation. Good luck with that. I've been through 2 housing crashes so far. The math doesn't work that way.
No. I am assuming appreciation that is in excess of the risk free rate of return and appreciation greater than the financing costs.

Anything you do to make money has risk associated (i.e. a housing crash). The only "safe" thing is to lose money by stuffing cash under your mattress.

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4. You can't spend your house. Let's say you buy House X for $150,000. You leverage it to the hilt for 30 years. In 20 years, you owe $50K on it and the house is worth. . . .$300K. (Aside: I purchased my house in the LAST housing recession. If I were to sell it today, 19 years later, it's worth about 50% more, not double, but I'll give you a double.) So I've got $250K of equity. PARTAYYYYYY!!!! Until I have to eat it. My choices are mortgage it back to the hilt and hope I don't lose it, reverse mortgage or sell it and buy DOWN. (Something I don't see people doing in practice. People buy SIDEWAYS at best.) You don't gain some sort of edge, financially. You gain the same house, nothing more. What it is worth now and/or later are just mathematical place-holders with no real value because you can't eat the woodwork.
Not true. What you can do is live in an appreciating asset that is more than you need when you have income, offsetting your taxable income, sell and move into something more reasonable when you get older and dont have income realizing the gains.

You do realize that most wealthy people were very highly leveraged as some point in their life? You realize that successful companies were most like (and most likely are) leveraged? Good money to borrow is money that makes you money. Bad money to borrow is money that is gone.

You actually have to break out of the thinking that debt = bad to reach the amounts of wealth most people want but only a few obtain. You don't get wealthy (except by luck) by taking the safe road.
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Old 02-07-2013, 14:14   #62
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my take home pay wont take me home, unless i lived in the projects.....
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Old 02-07-2013, 14:15   #63
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my take home pay wont take me home, unless i lived in the projects.....
Sounds like you need to relocate or find new employment
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Old 02-07-2013, 14:18   #64
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Sounds like you need to relocate or find new employment
hard to do....housing in my area is tough for the seller to get what they paid for it even 5 years ago......

i could sell at a lose, file bankruptcy, divorce my wife (but still live together) so she can get food stamps and all those other goodies from welfare.....then rent a house for more than i pay in mortgage currently....
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Old 02-07-2013, 15:23   #65
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You are missing the point. It is possible to lower tax brackets (or even show a loss and no) tax with write offs. So, you can actually save much more than just the tax; you can actually lower tax brackets which can mean a LOT of tax savings.
You're tax savings are not higher than the cost of the goods you wrote off. The savings may make an expensive purchase more palatable but you don't break even or save money.
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Old 02-07-2013, 15:25   #66
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I've had some interesting conversations with some folks who are in the "middle class". These people have vehicles financed for more than my home is worth, boats and ATV's, zero turn mowers, and large homes that are easily 5 to 10 times their gross income. They are faking "living large." It's an eminence front...

I imagine this scenario exists in every community in America.
Agreed. Debt is always a risk and never wise.
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Old 02-07-2013, 15:36   #67
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You're tax savings are not higher than the cost of the goods you wrote off. The savings may make an expensive purchase more palatable but you don't break even or save money.
That is most of the time true unless you write something of that has a tax credit as opposed to a deduction.

What you are not seeing is that if you were going to buy an SUV and lets say you found a nice one for $35k, and then you fell in love with the escalde at $70k. You would have $35k more deduction. That $35k deduction may move you to a lower bracket and you may go from a 30% bracket to a 25% bracket. That means that the you save 5% on your entire tax bill and done right that can push the cost of a escalade to the same price as the $35k SUV.

Lets say you are a small business owner. You clear $250k. All of a sudden you are looking at a hefty tax bill on $250k. Probably around $75k tax liability.

You buy a big house and pay $50k a year in interest. $7k a year property tax. You buy a $70k SUV. $25k in a SEP. $20k worth of misc write-offs. You have now have $172 taken off your taxable income and you are left with $78k taxable income. Now you have just dropped to around a 20% tax bracket and are only taxed on $78k. Total tax bill is now about $16k. You just saved almost $60k in taxes for stuff you wanted anyhow.

So, give $60k to govt or enjoy the $60k?
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Old 02-07-2013, 16:21   #68
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It's an eminence front. (It's a put on)
It's hard.

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Old 02-07-2013, 19:53   #69
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Agreed. Debt is always a risk and never wise.
That's simply not true. Debt is often wise.

I borrowed close to $100k to get my PhD. I had to pay child support during grad school, among other things, my actual salary on paper was less than the amount of my bills.

Without the PhD, I would never have landed the job I have now.

The $100k was an investment, and by far the best money I ever spent even though I had to borrow it.
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Old 02-07-2013, 20:21   #70
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Spend it all because last I checked you can't take it with you.
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Old 02-07-2013, 20:50   #71
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Several work in the defense industry in Huntsville. If sequestration comes, the pain is going to be rough.

Those who don't work in the industry, and earn less, live just as large.

I have a feeling that the bursting of the bubble or a balck swan event will cause a shift in class structure. These middle class folks won't be able to maintain the status quo.

I imagine this scenario exists in every community in America.

Your observations are not new. During the mid 1970's, my father told me of a conversation with one of his co-workers. The economy took a bit of a downturn and everyone at his place of employment was reduced to 40 hours a week. His co-worker asked my father since he had been there for over 30 years, when he thought thing would pick up again. My father was puzzled at the question, since they were fully employed. His co-worker stated he was having a tough time making ends meet on 40 hours a week. He had to pay his first and second mortgage, two car payments, RV payment and boat loan.

He was quite miffed when my father told him he was working class person and not a millionaire.
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Old 02-07-2013, 20:57   #72
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Your observations are not new. During the mid 1970's, my father told me of a conversation with one of his co-workers. The economy took a bit of a downturn and everyone at his place of employment was reduced to 40 hours a week. His co-worker asked my father since he had been there for over 30 years, when he thought thing would pick up again. My father was puzzled at the question, since they were fully employed. His co-worker stated he was having a tough time making ends meet on 40 hours a week. He had to pay his first and second mortgage, two car payments, RV payment and boat loan.

He was quite miffed when my father told him he was working class person and not a millionaire.
What would your father say if it was explained to him that most millionaires are working class people?
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Old 02-07-2013, 21:51   #73
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Agreed. Debt is always a risk and never wise.
IIRC, you attended medical school. Did you pay cash? HH
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Old 02-07-2013, 21:55   #74
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What would your father say if it was explained to him that most millionaires are working class people?
I'm sure his father would havel laughed, as whoever tried to explain that nonsense to anyone is an idiot. What millionaire has a W-2 as their sole tax document and files a 1040EZ? HH
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Old 02-07-2013, 21:57   #75
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What would your father say if it was explained to him that most millionaires are working class people?
He would believe it. He's know a few.
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