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Millionaire to Millennials: Stop Buying Avocado Toast If You Want to Buy a Home

Forums - General Discussion - Millionaire to Millennials: Stop Buying Avocado Toast If You Want to Buy a Home

numberwang said:

I have done the avocado toast math, if you save an average 7$ a day and put it in an account with 3% interest over 45 years you will end up with 233K$ savings. (Inflation would increase a future house price and your necessary savings).

https://www.wellandgood.com/good-food/why-avocado-toast-costs-10-dollars/

https://www.investor.gov/additional-resources/free-financial-planning-tools/compound-interest-calculator

 

I think it would be reasonable to include inflation directly, say we are very optimistic on the investment strategy, so 4%, or 1.92% after 2% inflation, per year.

It's unreasonable to expect someone to wait 45 years to buy a home - A young millennial (now 25) would have, in average, another 10 years to appreciate the purchase before dying. Not exactly a worthy investment. A reasonable limit, I think, for a long-term investment would be 20 years.

 

So, 30$ a day would need to be saved consistently, every day, in what I consider an optimistic scenario. That's quite a lot, for the majority of people.

 

I also don't think that there is really such a strong overlap between the people frequenting trendy cafés and those complaining about the difficulties of buying a house. I'd say the former are largely spoiled brats who'll end up getting the necessary funds from daddy, regardless, if push comes to shove.



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VGPolyglot said:
Nymeria said:

1. Unexpected expenses could ruin you without savings.

2. Financial planning allows you greater options through life and especially for retirement.

3. Money makes money.  Saving and investing are the equivalent of having a second job you don't have to work at, but get the money.

We live in a consumer-based economy though. If everyone started saving their money we'd go into a recession.

Not really man... a lot of the recession and in Brazil the crysis is due to people consuming to the point of entering debt and then imploding.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

DonFerrari said:
VGPolyglot said:

We live in a consumer-based economy though. If everyone started saving their money we'd go into a recession.

Not really man... a lot of the recession and in Brazil the crysis is due to people consuming to the point of entering debt and then imploding.

How will the economy grow if nobody buys anything?



VGPolyglot said:
DonFerrari said:

Not really man... a lot of the recession and in Brazil the crysis is due to people consuming to the point of entering debt and then imploding.

How will the economy grow if nobody buys anything?

Who said anything about no one buying anything?

Any real economy growth have strong savings accompanying it, so it can be invested, infrastructure created, costs lowered, etc. On an economy of all in debt or with small savings leads to inflation while lowering GDP.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

DonFerrari said:
VGPolyglot said:

How will the economy grow if nobody buys anything?

Who said anything about no one buying anything?

Any real economy growth have strong savings accompanying it, so it can be invested, infrastructure created, costs lowered, etc. On an economy of all in debt or with small savings leads to inflation while lowering GDP.

Creating infrastructure requires the spending of money, many countries go into debt for infrastructure as it is something that cannot be just be ignored until savings are high enough, you need roads to get to the stores and businesses, electricity to provide power for the machinery, school to indoctrinate the population, etc.



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VGPolyglot said:
DonFerrari said:

Who said anything about no one buying anything?

Any real economy growth have strong savings accompanying it, so it can be invested, infrastructure created, costs lowered, etc. On an economy of all in debt or with small savings leads to inflation while lowering GDP.

Creating infrastructure requires the spending of money, many countries go into debt for infrastructure as it is something that cannot be just be ignored until savings are high enough, you need roads to get to the stores and businesses, electricity to provide power for the machinery, school to indoctrinate the population, etc.

And nothing of that comes from population in debt, but population making savings that will loan the money (invest) on companies that will provide the infrastructure.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

Without going into detail, I've seen a lot of people "Go broke trying to look rich".

What the man is saying is live within your means and don't waste money you could be saving on something that isn't going to benefit you in 24 hours. Be it avocado toast, the latest pair of Air Jordans, or getting a pedicure. It's fine if you can afford it but a lot of people would be a lot better off if they weren't "Keeping up with the Joneses". I'm willing to bet a lot of people don't even like avocado toast (or whatever it's a metaphor for) but just want to impress their friends.



Twitter: @d21lewis  --I'll add you if you add me!!

VGPolyglot said:
Nymeria said:

1. Unexpected expenses could ruin you without savings.

2. Financial planning allows you greater options through life and especially for retirement.

3. Money makes money.  Saving and investing are the equivalent of having a second job you don't have to work at, but get the money.

We live in a consumer-based economy though. If everyone started saving their money we'd go into a recession.

I wasn't suggesting saving 50% of your income.

Setting aside 10% for savings and 90% for spending would a major improvement for many people.  Right now a large number of Americans save 1-2% if they do at all.

Savings can be divided into three categories, short terms "rainy day" fund, long term savings plan, and retirement plan.

Rainy day is a set amount of money you want to have, my suggestion was two months minimum of bills.  Let's say that is $3000 for someone to avoid issues like a hot water heater bursting or replacing car tires.  You are spending that money, it is set aside for a purpose.  If you're lucky and never have rainy days then you can stop allocating funds to it and spend it.

Long term is being able to save up for house or car because these saving are building to spending.  Doing this puts you in a far better position and helps you live within means.

Retirement investment account is savings, but the money serves a purpose in the economy, it goes to companies and grows wealth.  For many people these days can expect to live into their 70s and 80s so if you want to retire at 65 like most have to figure how to live those last 5 to 25 years of your life.

Spending does move an economy, but it isn't sustainable and can create bubbles that lead to recessions like we saw in 2008 with housing.  We were so desperate to sell houses they were sold in a way that people who could not afford them had them and then were foreclosed on when the payments ramped up.  If you had a system where 40% down payment was required you'd have fewer home owners, but the market would be solid and less predictable.  It's a balance in a society how much we promote growth or sustainability.  I think growth has been pushed for so long that we live way beyond our capacities and another recession seems inevitable in coming years.



Nymeria said:
VGPolyglot said:

We live in a consumer-based economy though. If everyone started saving their money we'd go into a recession.

I wasn't suggesting saving 50% of your income.

Setting aside 10% for savings and 90% for spending would a major improvement for many people.  Right now a large number of Americans save 1-2% if they do at all.

Savings can be divided into three categories, short terms "rainy day" fund, long term savings plan, and retirement plan.

Rainy day is a set amount of money you want to have, my suggestion was two months minimum of bills.  Let's say that is $3000 for someone to avoid issues like a hot water heater bursting or replacing car tires.  You are spending that money, it is set aside for a purpose.  If you're lucky and never have rainy days then you can stop allocating funds to it and spend it.

Long term is being able to save up for house or car because these saving are building to spending.  Doing this puts you in a far better position and helps you live within means.

Retirement investment account is savings, but the money serves a purpose in the economy, it goes to companies and grows wealth.  For many people these days can expect to live into their 70s and 80s so if you want to retire at 65 like most have to figure how to live those last 5 to 25 years of your life.

Spending does move an economy, but it isn't sustainable and can create bubbles that lead to recessions like we saw in 2008 with housing.  We were so desperate to sell houses they were sold in a way that people who could not afford them had them and then were foreclosed on when the payments ramped up.  If you had a system where 40% down payment was required you'd have fewer home owners, but the market would be solid and less predictable.  It's a balance in a society how much we promote growth or sustainability.  I think growth has been pushed for so long that we live way beyond our capacities and another recession seems inevitable in coming years.

Agree with most you said, would only say that 30% saving would be a good compromise, making like you said a part for rainy days (you saving that once just keep it unmoved with the amount that should go there going to long term or retirement). And depending of the country don't save for a house or car, keep that invested and pay rent..

Here you can have something like 10-15% annual interest on your saving if invested on safe means. So if you save 300k for housing that would net you 30-45k annually, while the rent of a property of this value would be around 20-25k annually. And in the case of the investment it is liquid and fast to move if you need while the house if you go on a finnancial problem is a very hard moving item.

While in USA it is like the opposite, the safe investment generating 2% a year while rent is quite high so buying a house takes precedence. Unfortunately people put a lot of other priorities in front of it and will live a life of debts.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

VGPolyglot said:
DonFerrari said:

Who said anything about no one buying anything?

Any real economy growth have strong savings accompanying it, so it can be invested, infrastructure created, costs lowered, etc. On an economy of all in debt or with small savings leads to inflation while lowering GDP.

Creating infrastructure requires the spending of money, many countries go into debt for infrastructure as it is something that cannot be just be ignored until savings are high enough, you need roads to get to the stores and businesses, electricity to provide power for the machinery, school to indoctrinate the population, etc.

hmmm...



Bet Shiken that COD would outsell Battlefield in 2018. http://gamrconnect.vgchartz.com/post.php?id=8749702