this post was submitted on 14 Nov 2023
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74
Why does the value of things in dollars not make sense? (lemm.ee)
submitted 2 years ago by [email protected] to c/[email protected]
69 comments fedilink hide all child comments
 

This is difficult to explain. I can't figure out a rule of thumb for spending, the prices of things fluctuate so quickly it's confusing. Here are some examples

  1. A house, prices are out of control, inventory is low, sellers are greedy. I'm feeling not only unable to afford it but finding lack of value in inflated prices

  2. Computer parts. Relatively cheap compared to pandemic but more expensive than before but also much cheaper than 90s/00s, but still could be cheaper

  3. TWS earbuds, completely different ball game from regular earbuds, disposable electronics.

  4. Food. Nights out with drinks now sometimes cost me more than 2 & 3, but seem like just keeping up with inflation

The prices range from 100,000s to 100s, but some are fleeting, some semi permanent, some last a long time. I also spend hours researching prices of parts and waiting for sales, but spending the same amount on social events in an instant

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[–] [email protected] 6 points 2 years ago (31 children)

No doubt there is no value to buying a home in a lot of areas rn.

I rent a 2 br townhouse for 1800/mo. I have a detached garage. I have a basement with washer and dryer. I have about about 1200 sqft plus the basement which is unfinished. Utilities combined is 200/mo. Heat is included.

A similar unit would be about $300k. I'd get probably 8% interest with a 750 credit score. I'd have basically the same mortgage as I have for rent. Plus I'd be responsible for stuff I'm not right now, like heat, water, sewer, trash, recycling, lawn care, and literally any maintenance.

It's a way, way better deal to be renting right now I many areas.

[–] [email protected] -2 points 2 years ago (2 children)

If you're looking at 300k @ 8%, youre not going to be paying anything similar to your current rent. I got a place for 190k @ 6%, and I'm paying about 200/mo less for my mortgage than you do for rent. At that rate, I'd be surprised if you got out under 2500/mo.

[–] [email protected] 1 points 2 years ago (1 children)

did that include taxes being paid from escrow? He might be doing a simplified thing and did not include taxes and such. Something I think to that people don't realize with mortgages is the excrow part can go up so the monthly is not completely locked in.

[–] [email protected] 1 points 2 years ago

Yes, as stated below that includes property taxes and insurance, things that this person likely isn't thinking about and isn't figuring into their monthly payment. I hope I'm wrong, but I've watched friends crash and burn doing something similar.

[–] [email protected] 0 points 2 years ago (2 children)

8% of 300,000 is 24,000.

That is $2000/month.

It is basic arithmetic.

[–] [email protected] 1 points 2 years ago* (last edited 2 years ago) (1 children)

Sure, if you ignore all kinds of other factors like additional closing costs added to your mortgage, as well as stuff like insurance and property taxes and the interest on the loan itself. But yeah, simple arithmetic....

I wish it was as easy as just a percentage of the mortgage every month

[–] [email protected] 1 points 2 years ago* (last edited 2 years ago) (1 children)

The offset to the basic arithmetic is negligible.

In my case, a $300k home would yield a $2k/mo mortgage

Source: I'm fucking buying a house.

Jfc y'all

It is basic arithmetic.

[–] [email protected] 1 points 2 years ago (1 children)

That’s not at all how interest is calculated on amortized loans

[–] [email protected] 1 points 2 years ago (1 children)

Yes it is.

There are a few factors that modulate this, very slightly

0 down on 300k at 8% yields a 2025/mo mortgage.

It is basic arithmetic.

[–] [email protected] 0 points 2 years ago* (last edited 2 years ago) (1 children)

No, it’s not.

You’re rationale that 8% of 300,000 = 24,000 therefore $2,000/mo., by dumb luck, comes close at 8%.

  • 12% of 300,00 = 36,000/12 = 3,000; actual is $3085/mo
  • 8% of 300,000 = 24,000/12 = 2,000; actual is $2200/mo (not $2025)
  • 4% of 300,000 = 12,000/12= 1,000; actual is $1432/mo
  • 2% of 300,000 = 6,000/12 = 500; actual is $1108/mo
  • 0% of 300,000 = 0/12 = 0; actual is $833/mo

It’s algebra, not arithmetic.

P = (r * A) / (1 - (1 + r)^(-n))

where:

  • P is the monthly payment
  • A is the loan amount
  • r is the monthly interest rate (APR/12)
  • n is the total number of payments
[–] [email protected] 1 points 2 years ago* (last edited 2 years ago) (1 children)

Do you live in some world where PEMDAS/order of operations isn't basic arithmetic?!

Jfc..

Even we Americans are taught this shit by age 12.

Seriously.

PS., it is $2025. Source: qualified. Decided to wait until $2025/Mo gets me something worthwhile. Your basic arithmetic failed to include the handful of factors that mitigate these numbers slightly zip code/taxes, hoa fees, etc. still, basic fucking arithmetic.

Stay in school.

[–] [email protected] 0 points 2 years ago* (last edited 2 years ago) (1 children)

Not sure how zip code factors into “simple arithmetic” but you do you.

[–] [email protected] 1 points 2 years ago (1 children)

ok

[–] [email protected] 0 points 2 years ago (1 children)

Interest deduction… meaning not 8% anymore. It doesn’t change the math, it changes the rate.

[–] [email protected] 1 points 2 years ago* (last edited 2 years ago) (1 children)

I didn't say it changes the arithmetic, numb nuts. I said it can modulate the price slightly.

Jesus stfu already. Nothing worse than an internet sea lion who can't admit when they're wrong.

[–] [email protected] 0 points 2 years ago (1 children)

Project much?

[–] [email protected] 1 points 2 years ago

Aaaand you're blocked.

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