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Statistics Aside, Many Feel Pinch Of Daily Costs

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Statistics Aside, Many Feel Pinch of Daily Costs

By JENNIFER STEINHAUER

Published: May 6, 2006

(Taken from: New York Times)

BRANDON, Fla., May 2 — As a rule, when Americans feel financially pinched, the causes are clear: high unemployment, soaring interest rates, depressed home values and a wilting stock market.

But many Americans now say they are feeling squeezed in the absence of these factors. Their concerns are instead centered on a combination of high gasoline prices, creeping insurance costs and the pressure of a large number of adjustable-rate mortgages, now jumping to market rates, that helped to fuel one of the largest housing booms in American history.

Though they may not fear for their jobs or worry about long-range financial health — national polls show a general satisfaction with the economy — their kitchen-counter economy is an increasing source of everyday anxiety.

In Brandon and other suburbs of Tampa, where gas prices are among the highest in the nation and home insurance rates have risen since last summer's hurricanes, residents say they have had all they can take.

"We're really worried about a lot of things," said Nancy Tuttle, co-owner of a vending machine business in the suburbs here. "The cost of gas, the cost of house insurance, the cost of medical insurance, it's just everything."

The increase in prices, particularly of gasoline, is taking a political toll on President Bush, even in a Republican area like these suburbs. A recent nationwide CBS News poll found that only 33 percent of those surveyed approved of Mr. Bush's job performance and that 74 percent disapproved of his handling of the gasoline issue.

"We went from totally believing in Bush to really having our doubts," said Wayne Toomey, who owns a house with Ms. Tuttle in the nearby suburb of Parrish. "It comes down to his lack of care about gas prices."

Ms. Tuttle, 51, and Mr. Toomey, 58, have each gotten smaller cars and have cut some household costs. "It's a total struggle," said Mr. Toomey, who owns the vending machine business with Ms. Tuttle. "You would have to have your head in the sand to think things are going well in the United States."

Further, millions of Americans who have financed their homes with adjustable-rate short-term mortgages — some of which require interest-only payments — are starting to see their monthly payments rise as low introductory rates expire and market rates kick in.

"I just cringe every time I get that bill," said Mindi Davis, 35, who took out an adjustable-rate second mortgage two years ago for the home she shares with her husband and two children here. The bill, which was $100 a month in May 2004, is now $219 a month and climbing. "I anticipated an increase," Mrs. Davis said, "just not this much that quickly."

Brian Wrage, who lives in Tampa, said he had begun to unload his investment properties in part because of the adjustable-rate mortgages attached to them. "My second mortgage on one property started at 5.7, and by the time we sold it three years later it was 9.9," Mr. Wrage said. "It was eye-opening: adjustable rate means up."

The rising costs have contributed to a 38 percent increase nationally in home foreclosures in the first quarter of this year over the same period in 2005. Florida had the second-largest number of foreclosures in the nation during that period — 29,636 — behind Texas, which had 40,236. Of the Florida foreclosures, 195 were in Brandon.

"Normally, nothing is a better predictor of foreclosures than high unemployment and credit card delinquencies," said Rick Sharga, a vice president of RealtyTrac Inc., an online foreclosure marketplace, which tracked the foreclosure data. "But what most people are talking about isn't any of that now. We think adjustable-rate increases coupled with a slowdown in the price appreciation and the demand of houses is why we are starting to see a fairly significant increase in the foreclosure rates generally now."

Foreclosure rates have been at historic lows since 2002 because of low interest rates and high housing demand. But soaring home prices and flat wages are now causing trouble for many families, especially those who took out below-market introductory mortgages a few years ago and are now paying the piper.

This is true even in a place like Hillsborough County, which includes Tampa and most of its suburbs, where the unemployment rate trails the national average, job growth remains strong and business costs are among the lowest in the nation.

Further, following a requirement three years ago by the federal comptroller of the currency to raise minimum monthly payments on credit cards, some banks have recently gone as far as to double those payments.

"People who are living beyond their means are going to have a harder time making ends meet than ever in history," Mr. Sharga said.

[Economic data released Friday showed that hourly wages had risen slightly faster than inflation over the last year, though they have basically matched the inflation rate since 2002. Although the consumer confidence index compiled by the Conference Board reached a four-year high last week, other polls, including one released by Ipsos on Friday, showed confidence sinking.]

And then there is the story of gasoline, which in Florida now averages $3 to $3.45 a gallon.

"I don't even like my job, but I can't face lowering my pay" because of rising gas costs, said Nia Baker, 37, who sells home health products. "I used to fill my car up once a week for $25, and now I fill up twice a week for $40. I feel like the economy is pretty bad, the way these gas prices are going up. "

Denise Meicher, 50, gets by on her pension from a former career and her job as a customer service specialist. But high gasoline prices have caused her to curtail her activities and close her pocketbook a bit more.

"It is 60 miles round trip to visit my family," Ms. Meicher said. "It costs me a half a tank of gas and maybe $15 when it used to be $8. I give it a second thought now when the family says, 'Let's do this or that.' We are real close, but now I feel like I am saying 'yes' maybe two out of every three times these days."

Gasoline prices also have a ripple effect. Debi Martinez said her husband's homebuilding business had been hurt as contractors passed on costs.

"The guy who does his septic tank wants $500 more because of gas prices," said Ms. Martinez, 49. "There was a $75 increase on the man who does the wallboard. We are no longer a seller's market."

In Florida, insurance companies have increased rates as much as 40 percent in coastal areas, after a bruising hurricane season in 2005 left many insurers liable for billions of dollars in claims. Residents in other states have also been affected; in New York, Allstate recently said it would drop 28,000 policyholders in eight counties, citing risk.

"Our homeowner's insurance went up $400 a year within the last year due to the hurricanes," Ms. Baker said.

Not everyone, however, sees the same shadow over their personal economy. Steve Adams was a rare bird in the strip mall here, a person who thinks people should stop complaining about gasoline prices, which have been high in other countries for years, and about mortgages that are attached to homes that have soared in value.

"The key thing about this area is there is a lot of opportunity," said Mr. Adams, who is a project manager in an accounting firm and lives with his wife and two small children. "The job market here is great, the costs are relatively low, and my property value has gone up $100,000. Compared to the European economy, where gas prices have also been sky high, well, welcome to the whole world."

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See here as well....the inflation at 2% scam is being realised in the real world...

"I had a pretty decent payrise when I was promoted in 2004 but it feels like I'm scrimping and saving more now than I ever did when my debt was at it's biggest! "

http://forums.moneysavingexpert.com/showthread.html?t=193065

"Everything keeps going up, council tax, electric, gas etc and yet our wages hardly change from year to year. A couple of years ago we could afford a holiday (only a cheap self catering caravan in this country) but for the last 2 years we have not had one. We are definitely worse off than we were 2 years ago."

http://forums.moneysavingexpert.com/showth...light=depressed

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Statistics Aside, Many Feel Pinch of Daily Costs

By JENNIFER STEINHAUER

Published: May 6, 2006

(Taken from: New York Times)

And then there is the story of gasoline, which in Florida now averages $3 to $3.45 a gallon.

"It is 60 miles round trip to visit my family," Ms. Meicher said. "It costs me a half a tank of gas and maybe $15 when it used to be $8..."

$15 at $3 a gallon is 5 gallons for 60 mile round trip. That's 12 miles to the gallon. I know the yanks have teeny weeny gallons but she's driving a tank.

Quite illustrative really of how gas-guzzlers show a sort of gearing effect to rising fuel prices.

Edited by redwing

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"I just cringe every time I get that bill," said Mindi Davis, 35, who took out an adjustable-rate second mortgage two years ago for the home she shares with her husband and two children here. The bill, which was $100 a month in May 2004, is now $219 a month and climbing. "I anticipated an increase," Mrs. Davis said, "just not this much that quickly."

Her mortgage is only $219 a month?! :o

Or is that in addition to her mortgage?

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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