Millennials: Avocados or homes?

[MoneyGuy]

Didn't we have this same thread a few months ago?

[Tacopuck]

Originally Posted by blankall

There have always been people who are good with money and people who are bad with it. Yes, you see more smart phones now, but a generation ago you had people buying corvettes they couldn't afford. Before that you had people with decade long leases on colour televisions.

The difference is that currently, property prices and living expenses are far higher than wages.

Standard of living has consistently been on the rise.

[Enoch Root]

Originally Posted by blankall

Interesting that you use coffee as an example:

http://nbakki.hatenablog.com/entry/c...n_coffee_price

Shows that the price of coffee is about 4x higher than it was now. However, inflation is about 6.43 times higher:

http://www.bankofcanada.ca/rates/rel...on-calculator/

So the cost of a coffee has actually gone down relative to wages. So baby boomers were paying about twice what the current generation is willing to spend on a cup of coffee.

I have no doubt that a coffee in a cafe was more, in real dollars, then than it is now.

The point though, is that no one was doing it - no one got their coffee that way. The idea of 'buying' a coffee everyday was a completely new trend that started in the nineties (or at least really caught on then).

People didn't go to coffee shops every morning. Nor did they have personal phones, personal computers, subscriptions for music, movies, etc. Nothing like that existed.

[Bill Bumface]

Originally Posted by MoneyGuy

Didn't we have this same thread a few months ago?

Get off my lawn!

[Locke]

Originally Posted by MoneyGuy

Didn't we have this same thread a few months ago?

Yes, but this one has Avocado and Smugness levels of unmatched proportions.

[afc wimbledon]

Originally Posted by blankall

Interesting that you use coffee as an example:

http://www.cheatsheet.com/money-care...tml/?a=viewall

Shows that the price of coffee is about 5x higher than it was now. However, inflation is about 6.43 times higher:

http://www.bankofcanada.ca/rates/rel...on-calculator/

So the cost of a coffee has actually gone down relative to wages. So baby boomers were paying more for their coffee than people are now.

That's odd because it used to come for free with breakfast, in fact other than a cup in the morning and one at lunch the idea you'd go out and randomly buy a cup of coffee in a paper cup would have been seen as absurd by my grandfather, its not just price, its lifestyle, telephones and TV's are way cheaper now, but we replace them every 6 months so we spend way more on them in the long run. I would get beaten regularly for being on the phone at all back in the 70's when in the UK it was 20 cents a minute to make a call

[CliffFletcher]

Let's play Mutually-Compatible Facts:

• Housing is increasingly unaffordable.
  
• Millennials spend more on discretionary items like food, drink, and travel than previous generations.

In a sense, they're related. It used to be that once you were earning decent money (anything more than poverty wages) you moved out of home, started paying rent or a mortgage, and shortly thereafter started a family.

Today, because housing is out of reach, many 28 year olds with decent jobs live at home rent-free and so have loads of discretionary spending that goes to food, drink, and travel.

Would they all own their own homes if they dialed back the $300 a week drinks and eating out lifestyle? Probably not. Doesn't change the fact they spend more on luxury items than Gen Xers or Boomers did at the same age.

Originally Posted by blankall

Coffee shops aren't a new thing. Spending $200 less a year on coffee is not going to get you anywhere near a down payment on a decent property. The bigger question is why are middle class earners now expected to live in poverty without any kinds of luxuries? That certainly wasn't the way 30 years ago.

When I head out to 17th ave or 4th street these days I'm always astonished at the number of 25 and 28 year olds I see casually splashing out for $16 cocktails and $17 appetizers at restaurants that are a few-times-a-year treat for my wife and I.

How many pricy restaurants and bars catered to 24 to 34 year olds back in the 80s and 90s? Precious few. I lived in this city then, and you had bars and restaurants that catered to 20-somethings, bars and restaurants that catered to people willing to splash out a lot of money, but they were not the same places. A high-end bistro catering to 20-somethings would have been an oxymoron in 1995.

[redforever]

Originally Posted by afc wimbledon

We also lend absurd amounts of money to morons now in a way we never would have even twenty years ago.

My father (a financial dofus of Homer Simpsons like proportions) would have to crawl on bended knee across the bank managers door while chanting 'verily I am an idiot of the highest order' in order to get a small overdraft.

So true. We bought our first house in the mid 70's. Interest rates on mortgages were 9%. We had to put down 20% and mortgage payments were based on the primary earner's income, not on combined household income.

We mostly bought 20+ year old houses that averaged 1100 sq ft.

[rohara66]

Originally Posted by GGG

I think it was fairly common for middle class earners to live in 1000 sqft bungalows without cable and not buy new cars. You can't buy a sub-1000 square foot house anymore. Also Monthly payments for 25 year loans have relatively followed inflation. The housing price increase is mostly driven by cheap interest rates.

I do agree with you that subscriptions did use to exist but I do not believe it is as ubiquitous as today and certainly not as convenient to sign up and have recurring payments just do to payment tech.

Only because I stumbled upon this a couple days ago…. A Calgary developer has this ‘mini’ 1180ft2 house available in a new desirable suburban community. Home many people’s parents were raised in a home similar to this?



How many people really *need* a 2500ft2 3 bed, 4 bath, bonus room house?

[Slava]

I feel like a lot of the "millennial angst" is the same thing I felt after graduating university. It doesn't seem new, and a lot of it just comes down to having some patience and recognition that your parents went through some hard times as well.

I do think it's interesting that we hear about financial education like some amazing panacea though. People do learn about these things...they just fail to act. It's interesting that we talk about a lack of financial literacy when it comes to saving and things like that (which aren't as exciting) and yet people have plenty of drive and education to borrow and buy new things.

[blankall]

Originally Posted by CliffFletcher

Let's play Mutually-Compatible Facts:

• Housing is increasingly unaffordable.
  
• Millennials spend more on discretionary items like food, drink, and travel than previous generations.

In a sense, they're related. It used to be that once you were earning decent money (anything more than poverty wages) you moved out of home, started paying rent or a mortgage, and shortly thereafter started a family.

Today, because housing is out of reach, many 28 year olds with decent jobs live at home rent-free and so have loads of discretionary spending that goes to food, drink, and travel.

Would they all own their own homes if they dialed back the $300 a week drinks and eating out lifestyle? Probably not. Doesn't change the fact they spend more on luxury items than Gen Xers or Boomers did at the same age.




When I head out to 17th ave or 4th street these days I'm always astonished at the number of 25 and 28 year olds I see casually splashing out for $16 cocktails and $17 appetizers.

How many pricy restaurants and bars catered to 24 to 34 year olds back in the 80s and 90s? Precious few. I lived in this city then, and you had bars and restaurants that catered to 20-somethings, bars and restaurants that catered to people willing to splash out a lot of money, but they were not the same places. A high-end bistro catering to 20-somethings would have been an oxymoron in 1995.

I don't entirely disagree with this.

I think a lot of people in their 20s especially have basically just said F-it, and given up on savings/careers in order to leach of their parents and spend time at restaurants. I don't blame them, honestly. The alternative is staggering.

I even have a friend my age state to me that his plan to buy his first property was simply to borrow $300k from his parents' property, which is now worth 2.5 million. I bought my property about 6 years ago, and it's now worth 200k more than I paid, so I can't complain about the issue either. Overall, though it doesn't seem right.

Basically, we're eliminating social mobility. Moving up and affording even a basic property is becoming more and more difficult...unless you were fortunate enough to have parents with enough wealth to lift you up. And yes, theoretically, someone from nothing could save up and have that same $200-$300k, although it would require someone with both extreme success and extreme saving ability, and they'd probably still end up at the very lowest level. This was far from the norm a generation ago.

[Tacopuck]

Originally Posted by rubecube

How much of this do you think has to do with your upbringing though? If I had to guess, I'd bet that both of you grew up in houses where saving was actually an option for your parents. Also did you grow up in households with two parents? Because that makes a huge difference as well.

Two parents. Dad worked full time, mom stayed at home raising my siblings and I and had her own catering business to supplement the household income.

Myself and my siblings all got a part time jobs and worked through all of high school and summers between.

I paid for university through student loans even though my parents could have paid for it.

Worked every summer between university year but not during (i wanted to concentrate on my studies hence the student loans).

Paid off my student loans in less than 3 years instead of the 10 suggested (I more than tripped the recommended repayments amounts)

I saved and invested the entirety of my down payment for my house (my parents did give me a small amount as a congrats we are proud of you after the purchase <$5k which was never discussed).

TLDR - Hard work and living within your means was communicated to me from a young age.

[blankall]

Originally Posted by Tacopuck

Two parents. Dad worked full time, mom stayed at home raising my siblings and I and had her own catering business to supplement the household income.

Myself and my siblings all got a part time jobs and worked through all of high school and summers between.

I paid for university through student loans even though my parents could have paid for it.

Worked every summer between university year but not during (i wanted to concentrate on my studies hence the student loans).

Paid off my student loans in less than 3 years instead of the 10 suggested (I more than tripped the recommended repayments amounts)

I saved and invested the entirety of my down payment for my house (my parents did give me a small amount as a congrats we are proud of you after the purchase <$5k which was never discussed).

TLDR - Hard work and living within your means was communicated to me from a young age.

Would you have been able to do the same thing if the cost of your home was 5-10x higher?

[rubecube]

Originally Posted by blankall

Would you have been able to do the same thing if the cost of your home was 5-10x higher?

Or if you grew up in a single-parent household?

[Tacopuck]

Originally Posted by blankall

Would you have been able to do the same thing if the cost of your home was 5-10x higher?

No but I would not be trying to buy a home that would have cost that much. I bought my house less than 2 years ago.

[Tacopuck]

Originally Posted by rubecube

Or if you grew up in a single-parent household?

Yes, assuming the single parent tought me the same values as my two parents did. Albeit I'd have have less furniture.

[pylon]

Originally Posted by GirlySports

VACATIONS!

Millennials taking vacations are just crazy. My co-worker and her boyfriend whom she has been with for 3 months are spending Victoria Day weekend in VICTORIA!

I actually kinda agree with this, even though I'm unsure if it is being sarcastic.

My folks didn't go to Europe until their mid-sixties. I have never been either in my early 40's. Our family vacations were always in campgrounds or on road trips in our trusty old RV, which were far more economical.

I notice the young people I work with think it is an absolute necessity to save 5-10k, then blow the wad 6-12 months later on an exotic vacation, rinse, then repeat. My late teens and early twenties I squirreled away every nickel I have to buy my first townhouse. And it wasn't exactly cheap either, it was still $134k in 1994 and I saved 25% down over 3 years making 30-35k/yr at the time. That's pretty much minimum wage now.

I was on rabbit ear television at the time. No cell phone, and just a $25 land line. Drove $500 beaters and made very single nickel count. Generic everything at the grocery store, no bought lunches or dinners. I budgeted $200per month for entertainment, that was it. The irony was, suffering from 19-22 was the best payoff ever, because I leveraged that crappy little town house, and still do to this day, even though I sold it in 1998. It started the ball rolling. I can trace back everything I have to making a 3 years sacrifice, as I always timed the booms and busts well. Sold high, bought fixer-uppers low, rented in-between. But you have to decide you are gonna slum it for future prosperity.

Priorities have certainly shifted. Young peoples lives are more about the experience, than the acquisition of things/property. And I'm not necessarily saying it's the right or wrong way. But you can't really complain when you are 32 and don't have two nickels to scratch together when you buy every new iPhone, every year at $1000/hit, and have a $150 cell bill, and $100 internet bill every month. You haven't even entertained yourself yet or taken a vacation. In 2 years alone though, just those 3 things, that's $8000, damn near the minimum down payment for a $200k condo. I see people spend $12 every day minimum on lunch. That's $12,500 a year on a 5 day work week. You could half that by cooking at home. But that takes effort.

It is a 'now' generation, and I have somewhat succumbed to it myself. But I can afford it now because of the initial sacrifice. I see immigrants doing it when they come here, but born and raised typical suburban kids don't seem to have the same patience. Too much entitlement and impatience.

[Weitz]

Originally Posted by Tacopuck

Two parents. Dad worked full time, mom stayed at home raising my siblings and I and had her own catering business to supplement the household income.

Myself and my siblings all got a part time jobs and worked through all of high school and summers between.

I paid for university through student loans even though my parents could have paid for it.

Worked every summer between university year but not during (i wanted to concentrate on my studies hence the student loans).

Paid off my student loans in less than 3 years instead of the 10 suggested (I more than tripped the recommended repayments amounts)

I saved and invested the entirety of my down payment for my house (my parents did give me a small amount as a congrats we are proud of you after the purchase <$5k which was never discussed).

TLDR - Hard work and living within your means was communicated to me from a young age.

Needs more info for proper judgement:

- where was house purchased
- price of house
- degree taken
- salary of job after university.
- how many room mates

[CorsiHockeyLeague]

Originally Posted by rubecube

Or if you grew up in a single-parent household?

Enough out of you; we all know you're one of the "avocado" people.

Seriously though Cliff's pretty much got it. I spent, in retrospect, stupid amounts of money in my 20's on things that I didn't really need to spend money on and rented until this year. Had I not done so, I still wouldn't have been able to buy anything I'd have wanted to live in even in the Calgary market, and if I was buying somewhere like Vancouver? Lololol. Not a chance.

If you don't already have real estate, or significant family assistance, you're in tough to get into the market. So you spend the money you might otherwise have put towards that unattainable goal into something else. "If I can't have that, at least I can live like this."

[Weitz]

Originally Posted by CorsiHockeyLeague

Enough out of you; we all know you're one of the "avocado" people.

Seriously though Cliff's pretty much got it. I spent, in retrospect, stupid amounts of money in my 20's on things that I didn't really need to spend money on and rented until this year. Had I not done so, I still wouldn't have been able to buy anything I'd have wanted to live in even in the Calgary market, and if I was buying somewhere like Vancouver? Lololol. Not a chance.

If you don't already have real estate, or significant family assistance, you're in tough to get into the market. So you spend the money you might otherwise have put towards that unattainable goal into something else. "If I can't have that, at least I can live like this."

This about sums it up.

People can't afford what they want so the don't bother saving. I don't really blame them.