College, Car, and Home Costs for Our Kids

[Nutterbuster]

Please keep politics out of this thread!!

I'd like for it to not get shut down. Regardless of your thoughts on how we got here and where we're going, I think it's valuable to take the current trends and project them into the future to know where we stand.

@gcr0003, @kyler1945, and any other folks with new kiddos, I'd especially urge y'all to share any numbers you've crunched.

I just got done comparing and contrasting expenses now and 16-26 years ago. The numbers I looked at were:

• Average new and used car cost 16 years ago vs now
• Average tuition cost for in and out-of-state 4 year schools now vs 18 years ago
• Average new home costs now vs 26 years ago
• Average median household income now vs 18 years ago

I then took the percentage increase over that timeframe and assumed the same increase for the next block of time to get a rough feel for what the world could look like for my newborn when she goes to buy her first car, attend university, and buy a first home. That's about the best I can do with what I remember of the two stat courses I took a decade ago.

What I got was:

• College costs went up 69% over the last 18 years
• New car prices went up 101%
• Used car prices went up 233%
• New home prices went up 165%
• Median Household income went up 75%

I'd like for whoever is so inclined to do the same and compare/contrast their results. And if anybody is more statistically adept than me (not hard) I'd especially like their figures and an explanation of how/why they got their calculations. My wife and I are already trying really hard to put ourselves and our kid ahead as much as we can, but what I'm trying to do is build the best case I can to encourage both of my siblings to start doing the same for their new kids.

 

[Bigterp]

The strongest position against financial factors outside of your control is your income & lack of debt. If you’re planning ahead for providing for a growing family not saving & living above your means is one of the greatest hurdles. Sorry no real calculations there. But it solves those numbers over time.

 

[rambotogo]

Money just does not buy what it used to 20 or 30 years ago. Back in the 60s it was rare for the wife to work outside the home. Now the wife has to work just to stay afloat. I really see it getting a lot worse to be honest. Doing more with less will be the key.

 

[Bowtie747]

So yes stuff is getting more expensive but to get the whole picture you have to look at it more ways than one.

We just have more. Yea it’s easy to say everything is going up but look at the average size of homes. Look at what luxuries vehicles have now than what they did. My car can literally see all the way around itself and then tell me if I’m gonna hit something. These things are our own faults.

Peoples used to do starter homes. Now basically kids are buying their first home that is the same or more of the same home their parents have, that have worked for years to build up to the point.

We carry expensive phones, while driving in cars way more expensive than we need. To go to homes that our bigger than we need. A lot of it, is our fault.

If you drink a 4$ coffee, 5 times a week. 52 weeks in a year. That’s 1040$. Say your wife does that to that’s 2080$ a year. If you smoke or drink, then you’re literally shooting yourself in the foot and you can do your own calculations on that.

If you take averages and break down a families income, you’re broke. Harsh but true.

2 people’s making the average income, which I believe is 50-60k a yea. Let’s just say it’s 50 and both wife and Husband make that. Congrats you made 100k. Well let’s say you both drive 30,000$ vehicles, which isn’t u realistic to see. That’s roughly 1200$ in payments following for every 10,000 you’ll have around 200$ in payments. Then add 200-300$ in insurance now you’re at 1,500 to drive. Now you’re down to 82,000$ a year. Average driver drives 15,000 miles a year. X2 for wifey. 22 mpg and 3$ a gallon gets you 4,100. Now you’re down to 78,000. And all you have done was drive and own two vehicles. Let’s say your house is 1000$ a month. Down to 66,000. 200$ (cheap Lee if. Bill) now you’re down to 64,000. Oh yea taxes. I purposesly took this off later. Let’s say 30% and now you’re down to 34000. 32000$ with your coffees. Anyways I could keep going but all you have is your house, car, coffee, and an electric bill and you can see my point.

So I’m not saying there arnt “things” in place to keep us broke. I won’t go into that as you asked us not too. But I guess my point is getting them to see their own faults in part of the equation is huge. We seriously as a people need to cut back. It’s bad.

(My numbers may be off, way off, for some but there to get the point across)

 

[Horn]

So yes stuff is getting more expensive but to get the whole picture you have to look at it more ways than one.

We just have more. Yea it’s easy to say everything is going up but look at the average size of homes. Look at what luxuries vehicles have now than what they did. My car can literally see all the way around itself and then tell me if I’m gonna hit something. These things are our own faults.

Peoples used to do starter homes. Now basically kids are buying their first home that is the same or more of the same home their parents have, that have worked for years to build up to the point.

We carry expensive phones, while driving in cars way more expensive than we need. To go to homes that our bigger than we need. A lot of it, is our fault.

If you drink a 4$ coffee, 5 times a week. 52 weeks in a year. That’s 1040$. Say your wife does that to that’s 2080$ a year. If you smoke or drink, then you’re literally shooting yourself in the foot and you can do your own calculations on that.

If you take averages and break down a families income, you’re broke. Harsh but true.

2 people’s making the average income, which I believe is 50-60k a yea. Let’s just say it’s 50 and both wife and Husband make that. Congrats you made 100k. Well let’s say you both drive 30,000$ vehicles, which isn’t u realistic to see. That’s roughly 1200$ in payments following for every 10,000 you’ll have around 200$ in payments. Then add 200-300$ in insurance now you’re at 1,500 to drive. Now you’re down to 82,000$ a year. Average driver drives 15,000 miles a year. X2 for wifey. 22 mpg and 3$ a gallon gets you 4,100. Now you’re down to 78,000. And all you have done was drive and own two vehicles. Let’s say your house is 1000$ a month. Down to 66,000. 200$ (cheap Lee if. Bill) now you’re down to 64,000. Oh yea taxes. I purposesly took this off later. Let’s say 30% and now you’re down to 34000. 32000$ with your coffees. Anyways I could keep going but all you have is your house, car, coffee, and an electric bill and you can see my point.

So I’m not saying there arnt “things” in place to keep us broke. I won’t go into that as you asked us not too. But I guess my point is getting them to see their own faults in part of the equation is huge. We seriously as a people need to cut back. It’s bad.

(My numbers may be off, way off, for some but there to get the point across)

A lack of affordable options plays a big role in this, I think.

 

[woodsdog2]

If you can find one, pick up the book “The millionaire next door.” It really gives and provides a great perspective on how to live within your means and what things are and are not important. Basically an extrapolation of what @Bigterp said.

 

[smcchevy]

I have 4x young kids (all under 8). My wife and I have recently shifted from saving for college to sending them to the best private school that aligns with our values that we can afford. We made this shift on the heels of covid and the widespread education nonsense. At this point I think hard work and attitude is better than a degree/ college debt.

It's easy for me to get wrapped up in numbers and trends (self admitted nerd), but I honestly think that all I need to do is model the results I wish to see (hard work, positive attitude, integrity, sacrifice).

There are few things that I can control but spending less than I make is one of them. I think getting out of dept and staying out is the key to changing your and your kids future.

 

[Bigterp]

If you can find one, pick up the book “The millionaire next door.” It really gives and provides a great perspective on how to live within your means and what things are and are not important. Basically an extrapolation of what @Bigterp said.

Not to mention @Nutterbuster doesnt strike me as a things guy. Thats what happens when you have kids the stakes get higher & it’s easy to look around & be overwhelmed by the possibilities.

 

[TNSTAAFL]

I just read today in a USAToday article that the median net worth of Americans aged 25-29 today is $30k.

25 years ago my net worth was no where near that (even adjusted backwards for inflation) yet today in my 50s I'm ahead of the median.

Key ingredients:
1) A degree in something with sustained employability.
2) Getting and staying married to someone also with a degree in something with sustained employability.
3) Starting 401k/403b accounts immediately upon employment.
4) Increase contributions to the above, steadily getting to max as soon at possible. Basically when you get a raise you raise the withholding so you never see the new money.
5) Stop renting ASAP and bought a townhouse, later upgrade to house, both sooner than I thought was possible. They only get more expensive with time...which you want on your side as equity.
5) Open 529 account and increase contributions at every opportunity. Got to college years and was so happy we did that. Except worrying about all the debt forgiveness talk.
6) Open a post tax Roth IRA and get to max as soon as possible.

This was not really what you were looking for, but it is what I have to share. I know you individually already know most of these things and have done some.

In the end, my wife and I have lived beneath our means all these years, and we did so without ever having a formal budget. We pulled this off because our early commitment to automatic and heavy savings in retirement and 529 accounts basically meant we never really had any excess spending money. Always bought used cars. 10 years before our first vacation. Limited restaurant eating. No convenience store habits/purchases.


Sent from my SM-S901U using Tapatalk

 

[NMSbowhunter]

That is really the point of the Millionaire next door. Hollywood paints a picture of what a millionaire ought to look like and act like. Yeah, there are a few of those out there, but they tend to not remain millionaires for long since it is usually based on a very high income and if that goes away the money quickly does too. Most real world millionaires you would not be able to pick them out from the crowd. They don't drive Bentleys and have Yachts.

 

[Bowtie747]

A lack of affordable options plays a big role in this, I think.

Agreed, but again to the point. Why would someone make a car that has limited options? No one’s gonna buy it because they want the options. Same with houses. Everyone wants bigger, better so there arnt as money on the market. It’s a trap. I definitely get your point though.

 

[woodsdog2]

Another thing I was always taught is to pay yourself first. Especially when starting out. I don’t mean car payments and mortgage
Payments and hunting junk, I’m talking every two weeks or whenever you have a payday, put away x amount no matter what. Ideally, in a 401k or something where you can dollar cost average in an investment vehicle with a low price per earnings ratio. But the point is pay yourself no matter what each and every payday.

 

[GeoFish]

In todays world with AI, alot of those degree jobs will become a thing of the past. Screw a degree. Learn a skill they can't replace with a machine. I have a 2 year associate degree from a trade school. I have done well. In retirement with 0 debt.
People want it now. Can't save and wait. If you pay interest, you loose.
Buy quality so you only buy it once. My wife and I have the same kitchen table/chairs we bought over 40 years ago.

 

[NMSbowhunter]

Agreed, but again to the point. Why would someone make a car that has limited options? No one’s gonna buy it because they want the options. Same with houses. Everyone wants bigger, better so there arnt as money on the market. It’s a trap. I definitely get your point though.

We need an affordable no nonsense midsize 4x4 truck that doesn't cost what a house should cost. Make it simple and dang near indestructible (like the old Toyota Hilux was before it got banned in the US but available to the rest of the world). Don't put a single computer chip in it anywhere. I bet guys who really use their trucks would snap them up fast. The guys who buy $80,000 4x4's and never take them off pavement would not like them, for sure.

 

[woodsdog2]

I’ve never had a brand new car. I’m still driving my pickup that had 19k on it. It’s 7years old now and just flipped to 80k. Depreciation is a killer with a brand new vehicle. I’m blessed to have a job I can walk and or bike to so I’m not driving my truck every day. I try to take care of my possessions. Because we have bad winters and everything drips road salt for six months I pay extra to have my truck flyid filmed every year. I also try to wash it every week during the salt season. I could care less if I drive the latest and greatest. I just want something reliable that I can pull my firewood trailer with and is safe to take my family in.

 

[Andrew920]

I think it varies by where you live. I have an associate degree, and make a decent living with a pension. My wife has a degree and makes a good living with the 401k retirement. We don’t live above our means. Both of my kids have degrees. 1 kid just graduated and is searching for a job. The other works for a company that pays pretty good and has a pension.

We live in the Midwest in a small town. Houses and cars aren’t cheap here, but it’s nowhere near as expensive as bigger cities. It seems the majority of our population has shifted to urban living, which makes things way more expensive in those areas.

 

[Plebe]

To help @Nutterbuster as much as possible in this endeavor I think hard data is required. The general musings of some people from a saddlehunter forum probably aren’t going to convince siblings who won’t already follow the lead of kinsfolk who we know make a good argument.

Imo, there’s so many variables beyond the numbers and data, but to the request, that’s what matters.

 

[woodsdog2]

To help @Nutterbuster as much as possible in this endeavor I think hard data is required. The general musings of some people from a saddlehunter forum probably aren’t going to convince siblings who won’t already follow the lead of kinsfolk who we know make a good argument.

Imo, there’s so many variables beyond the numbers and data, but to the request, that’s what matters.

That’s an uphill slog…. People who don’t care much or think about those things will even further disassociate when somebody starts talking hard numbers. I could be wrong but typically, the eyes glaze over. Most people need to hear of simple behaviors and actions they can implement to meet a goal. Again, perhaps I’m wrong but if they were that interested in the stats already they probably wouldn’t be on that glide scope he’s concerned with them about.

 

[Plebe]

That’s an uphill slog…. People who don’t care much or think about those things will even further disassociate when somebody starts talking hard numbers. I could be wrong but typically, the eyes glaze over. Most people need to hear of simple behaviors and actions they can implement to meet a goal. Again, perhaps I’m wrong but if they were that interested in the stats already they probably wouldn’t be on that glide scope he’s concerned with them about.

Maybe someone can share a success story. Feel good kind of stuff. Or a horror story.

 

[roosterstraw]

Start a 529 for your kids. Even if they don’t go to college you can put the money into a Roth IRA for them, up to 35k. Limit will probably increase by the time they graduate.