What the heck are you buying if $2,400 per month can't cover your expenses after the mortgage payment is taken care of?
They also had two kids. Kids are expensive; they genuinely require new clothing every year, lots of doctor visits, etc. Of course, if you're not too proud for it, you can get a lot of this stuff from friends and family with older children, but it's still expensive.
My reaction when I had some financial trouble recently was to quickly to cut back on food purchases and evaluate moving to a smaller house. However, fortunately I still have a positive cash flow.
I was surprised when he mentioned paying over $100 for cable/internet with all these money problems. If it were me, that would be the first thing to go and I'd move back to $5/mo dial-up.
Sounds to me like they were able to avoid any big costs (like house repairs), but their brains couldn't really understand the cost of recurring payments on so many small things.
I've been in that situation many times over the past twenty years (though never nearly to that degree!), and I don't regret spending $x when I was going to be short $(x*10) or more.
you have to think of the 10% cut as a 10% discount on your debt PLUS recurring interests. Heck even 1% matters when it comes to paying down mortgages and debt.
Anyway, I know a bunch of people that think the same way. I knew one girl who basically couldn't afford to eat - she'd go hungry for several days at the end of each pay period because there was no money to buy food. (Not too surprisingly, she ended up with an eating disorder.) But she had more "stuff" - big screen TV, DVD-player, IPod, home entertainment system - than I've ever had. Her logic was that a few hundred bucks might by food for a couple weeks, then she'd just be hungry again. Or it could buy a big-screen TV, and she'd be hungry longer, but at least she'd be entertained in the meantime.
When she put it like that, it almost seemed rational. Being able to save and invest for the future is a luxury I have because I've never really had to want for the basic necessities.
I can analytically get my head around why people end up in a mental state where they think that buying a television for entertainment is a higher priority than buying food - it has a lot to do with (IMO) the way the brain develops, and how that relates to culture. In other words, pattern recognition in the mind doing what it does best, over the course of someone's entire life.
The problem is that everything around you is fascinating. I guess it's not to most people, and I should just consider myself lucky that I never feel the need to buy a bunch of entertainment luxuries to keep myself entertained.
When she put it like that, it almost seemed rational.
Yeah, it does seem almost rational. Really, I guess it is rational, assuming one puts a really high value on being entertained constantly via external media.
Ahh, people's mindsets get me in a bad mood sometimes.
When you live in a suburb of Pittsburgh with a median household income of $23,000, where 20% of the population lives below the poverty line, and your day job consists of saying "Would you like fries with that?", and most of your friends are shooting at each other or getting pregnant, then maybe not everything around you is fascinating.
In my case, I was part of that socioeconomic class from birth to 16, but from 16-20 I was homeless, and from 20-right now I was very poor, far beneath the poverty line in the states.
I kept that sense of fascination, and I've met tons of people who are dirt poor, and have been dirt poor their entire lives, who have that sense of fascination. I've met fewer people with it in the middle and upper classes.
That's not to say that there aren't a whole bunch of very poor people who lack it. If I had to honestly guess, I'd say that it's somewhat related to intelligence, and how many different ideas someone gets exposed to while they're young, and that the percentage of folks who are fascinated by the world is approximately the same throughout classes, and that I just haven't met enough middle to upper class people in my adult life to know yet.
I really, don't think that it's a luxury of class. It may get affected by class, but I don't think that the effect is as big as you suppose.
That's the standard line, I know. But your comment about saving misses the point: I was talking about times and situations when you have no option to build savings; you can only choose to go into debt by amount x or amount x+x/10 (for example). In such a case, you cannot save your way out of debt. What needs to happen is a radical change to either your income or outgo stream; if you don't get that change, you're screwed, and it hardly matters how much, but if you do get it, then it won't matter so much if you went into debt a bit more before that.
A dollar saved is certainly not the same, conceptually, as a dollar earned. In particular, the act of choosing not to buy things can only save me up to my current income (in a given period), no matter how much I choose not to buy. So if I decide not to buy that HDTV, I can save $1500, and if I choose not to buy a new Mac either, I can save another $1500, but if my income was only $2000, it's hard to claim that I saved $3000 this period. Money saved is merely potential money, while money earned is real money.
More accurately, I wasn't going to argue with my fiancee over it, and she didn't want me to pay for it before we were married. She was worried about the reliability of her current car (I'd guess mostly needlessly), but since she is a social worker occasionally moving kids around and visiting rough areas, I don't blame her for that part.
I paid cash for a 1 year old vehicle 6 years ago.
I'm glad my wife has promised that I'll only leave this marriage feet-first.
ETA: whoops, I missed the part saying those were automatically deducted. Downmod me.
I'm sorry to have to be the one to tell you this, but those promises fly out the window as soon as times get tough.
No matter what you think she thinks of you, when the kids come and times get tough, she will look at you and weigh having you around vs. having automatic custody of the kids + child support + alimony.