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Business, Economics, and Taxes: Eat Cereal for Dinner

ScoobyDoo said:
I'm at $7500 or so. Too much.
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Just took a gander at my HOI renewal quote. Going up $400 this year, mainly because of the sewer backup rider I pay for (unfortunately, it is needed here - I've already had one claim). However, they're also futzing with how they cover wind and hail damage now, going from a fixed deductible to a percentage of the home value that is almost $2000 higher and adding an amendment to exclude anything they deem "cosmetic". Fuckin' crooks.
 
The HOA I had when last living there very. very hands-off compared to the horrors I've read about the past several years, but I know it was in the minority.
 
FadeToBlack&Gold said:
Just took a gander at my HOI renewal quote. Going up $400 this year, mainly because of the sewer backup rider I pay for (unfortunately, it is needed here - I've already had one claim). However, they're also futzing with how they cover wind and hail damage now, going from a fixed deductible to a percentage of the home value that is almost $2000 higher and adding an amendment to exclude anything they deem "cosmetic". Fuckin' crooks.
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Like I said, HOA has gotten completely out of hand.

I know someone who absolutely can't sell a townhouse -- in Colorado Springs, no less -- because the HOA jumped so much after they bought it, nobody in the world will now buy that property with that kind of HOA hanging over their heads. So, these people rent it out, barely breaking even (with mortgage, taxes, HOA). It's going to be a real estate -- and credit rating -- albatross around their necks potentially for the rest of their lives.

They might be better off actually defaulting on it...
 
dxmnkd316 said:
For the first time since the year i bought my house, I had a create a budget because of daycare. I have no idea how people do it either. So much is getting cut just because of daycare.

And it's not like we were doing exorbitant travel or anything. We vacation in the upper peninsula. We do have the luxury of gopher hockey tickets, but those are stay GDit.
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Daycare around the Twin Cities is about $17k per year per child at a center. Given how many children are injured in home-based daycares, we opted for a known, trusted environment where my wife happened to know some of the staff. Yes, the price is higher at the centers compared to in-home places, but the safety considerations made that decision.

“Funny” bit on pricing: The younger the child, the higher the price as MN has stringent rules regarding caregivers per child. As my daughter aged out of one pricing group to the lower-priced group the annual rate hike would hit and basically undo those temporary pricing reliefs.

Side note, my daughter has spent much her time there with a pair of twins in her “class”. I’d feel sorry for that family if I didn’t know they were loaded.
 
Handyman said:
It is definitely happening...not much information though. Found some articles from last year about it but of course they were in a more positive light. S&P had a headline about how pension funds were lagging in their investment. This seemed to also include consumer debt as well btw...

(I am not a financial expert and have done little no research into the specifics but on the surface this is what I see)

I am loath to trust anything on Tik Tok but in theory yes, if this is really happening on the level they are suggesting it won't take much for things to go south badly. Private Equity these days is shady AF and we saw what happened when their big backer Silicon Valley Bank went under because of rate hikes. If the big banks started doing that on a massive scale the cascade effect could be deadly. If businesses that were purchased by Private Equity start failing not only are you dealing with much of the same issues the '08 crisis caused, but you are also adding in that hundreds/thousands of people will be out of work on tape of that. So you will have a spike in unemployment, consumer debt will skyrocket, homes will be lost, banks will be hit with defaults from both sides and likely even the Private Equity firms will get crunched because a lot of this will be underwritten by other investments (like how Musk used Tesla Stock as collateral for the Twitter purchase) or loans from banks that will be called due. Even if it is spread out over multiple quarters it will drag down the economy to a long term recession. If it all hits relatively quickly...well not to sound alarmist but it could literally destroy the financial sector and I am not being metaphorical.
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Yeah, but most commercial paper is from high quality companies with fairly good history of repaying debt. We're talking Nvidia, Google, AT&T, JP Morgan, etc. These are basically the debt of the S&P 500.

Take a look at the Vanguard Total Bond Market Index. This is purely bond market holdings. Almost 50% government, 22% mortgages and other asset-backed debt, 3% foreign, and the bulk being commercial debt (25%).

VBTLX-Vanguard Total Bond Market Index Fund Admiral Shares | Vanguard

investor.vanguard.com investor.vanguard.com

You don't see commercial paper show up until page 31 on their holdings disclosure. That lot is Anheuser-Busch debt ($153M out of $350B total assets in the fund). You can find the full list at the link above, but you'll find that they're as diverse as the S&P500. This is pretty typical for the largest bond market funds. It's a relatively low risk, stable investment, generally speaking.

Now, depending on how well these pension funds are managed (tugs at collar), they should be broadly diversified in stocks, debt, etc. If they're buying garbage debt at low yields then yes, there's a risk. Hard to know how much of a risk though.

Anyways, there's a reason total bond market funds are broadly diversified. The bulk is in government, which tends to be the safest bet but lowest yield. Then comes mortgages and commercial debt providing a bit of higher risk but higher yield. Each of these has somewhat different risk exposure and as long as the pension funds are following this type of strategy, they'll be fine. If we see a broad default on commercial debt, there are much, much bigger issues and there's no safe harbor. This would mean stocks and commercial bonds are worthless and companies start to file various flavors of bankruptcy.
 
St. Clown said:
Daycare around the Twin Cities is about $17k per year per child at a center. Given how many children are injured in home-based daycares, we opted for a known, trusted environment where my wife happened to know some of the staff. Yes, the price is higher at the centers compared to in-home places, but the safety considerations made that decision.

“Funny” bit on pricing: The younger the child, the higher the price as MN has stringent rules regarding caregivers per child. As my daughter aged out of one pricing group to the lower-priced group the annual rate hike would hit and basically undo those temporary pricing reliefs.

Side note, my daughter has spent much her time there with a pair of twins in her “class”. I’d feel sorry for that family if I didn’t know they were loaded.
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We're looking at around $24k for infant at 4:1 ratio. And your experience aobut the rate hikes is not unique. I've heard the same...

Even with twins I think we'd still want to go the daycare route. The cost of one of us staying home would just be too great. We'd have to find ways to cut something else. Thankfully that's not the case with us. I shudder thinking about that.
 
Jimjamesak said:
HOAs should be banned. They started as ways for rich people to have nice things like sidewalks and parks in private without having to pay for those same things in poor (black) neighborhoods. Then they figured out they could use them to fleece money from middle class suckers and here we are.
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Yes, it's modern day redlining. All covenants of any type should be banned.
 
I wouldnt trust any management of a pension...history has shown that they will do the bare minimum of research and chase. (and I think there is more to it than you are seeing in the Vanguard)
 
FadeToBlack&Gold said:
Just took a gander at my HOI renewal quote. Going up $400 this year, mainly because of the sewer backup rider I pay for (unfortunately, it is needed here - I've already had one claim). However, they're also futzing with how they cover wind and hail damage now, going from a fixed deductible to a percentage of the home value that is almost $2000 higher and adding an amendment to exclude anything they deem "cosmetic". Fuckin' crooks.
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Look at Amica if you can. They still do the fixed deductible. I've had great experience with them. They're a hair more expensive but claims were a breeze and they only have a very small advertising dept relative to the big names. I'm on their dividend policy which is closer to a true mutual company. Whatever extra money the dividend pool has at the end of the year after claims are taken out goes back to the policy holders. They've paid it out every year for the last 30 or 40 IIRC.

Anyways, shop around.
 
Definitely appreciate the insight, it's along the lines of what I was thinking. The video had a little more hair on fire urgency which made me wonder how much bluster their was.

Essentially, yeah, it's bad, but there isn't much anyone can do.

(Unless we could raid SSA lile DOGE and pocket the cash for later)
 
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