USA Money Matters

[scoobydooby]

This question is for our American friends....BBWCHATT, Clanad maybe? I was watching TV yesterday about the financial situation in the states and am now very curious about how Americans mortgage their properties, pay for their utilities etc. As you probably know, we pay income tax and National Insurance (and sometimes pension) straight from our wages (mine equates to about 28% of my total pay each month). I then pay another �120 per month council tax (for local area). My Gas, Electricity, Water and telephone are all about �50 per month each. Am I right in thinking that when you mortgage a property you have to stay with the lender? We can chop and change (sometimes with penalties) to get better deals. My mortgage is capped for the full 25 years at 6.29%, so I will always know the maximum I'll have to pay. On a slightly different matter, am I also right in thinking you don't get as much paid time off work as we do?

[sense4all]

I was speaking to one of the Mothers at school ( she is from the States ) but we are in UK now. As in the UK a couple of years ago when the endowments fiasco came to light - it is apparent that some of the home loans from twenty years ago were in her words ... not straightforward , and some even down right peculiar. It's crunch time all round. I always thought that the US re shopped, every (at least ) five years , all our friends do at any rate, some every couple of years if they were in the finance game themselves. Time off has always been a bone of contention , when I worked in recruitment full time we had to tell an American Director that his candidate quality was poor because no one in their right mind was going to leave a job on a similar par and payscale to get two week less holiday a year - once he got his head round that, we were able to furnish the positions!

[EngTeach]

Hi Scooby,

Out of our salary we pay into Social Security, Federal Tax, State Tax, city tax, unemployment insurance, and disability. This is about 20-25 % of of our gross salary. The amount of taxes depends on your income bracket. I also pay a mandatory 3% into my city retirement.( Iwork for NYC Schools) and then I voluntarily put 10% into a Tax deferred Annuity (TDA) account. It is like a 401 K plan. We can not live our retirement solely on Social Security and pension. So we must supplement with our own savings plan.

Our utility bills are just that:bills phone, gas, electric, water that you are responsible for out of take home pay.

The mortgage crisis here is that many people took Adjustable Rate Mortgages that now have interest rates so high that they can no longer afford the mortgage payments. I have a fixed 6% rate on a 30 yr. mortgage. I have refinanced 2 times in 5 years. Once to lower the rate and borrow more for work on house and the second time I kept the same rate but had some major flooding damage and had to waterproof, etc.
It is hard here. i own a two family home and the mortgage is $2000./month

[EngTeach]

Continued...... We get far less time off here.(I am a teacher so it is different), the regular busines folks usually start out with 2 weeks off after a year of employment and varies from company to company. The most I know of about is 5 weeks vacation time after about 10 years. My sister's company has off very few days in the year: New Years day, Memorial day (May), labour day,Thanksgiving day and Christmas Day. Any other days for religious observance must come from vacation time.

You also have much more generous maternity leave. We can take 12 weeks, but at no salary or use up vacation time/pay in that 12 weeks or go on disability. The 12 weeks is called Family Medical Leave Act. They must ho;d your position or a similar one at no pay. For example I could take up to 12 weeks to help care for my sick mother/child/husband/self but will not be paid.

How much time off is usual there?

[scoobydooby]

Oops - missed this one and have taken ages to reply. We get 4 weeks holiday (minimum) over here. However, in most cases that doesn't include Public Holidays - so it's 5 weeks plus. However, a change in the law (which was either this year already, or next year) means everyone has to have a minimum of 28 days (including Public Holidays). Of course, for people who are on the minimum, this will be an increase. However, I get 27 days Plus public Holidays already (been with company for 12 years). I can't recall when the change took/takes place as it doesn't apply to me. (I'm one of the lucky ones already). I also work flexitime which means (within reason and within the guidlines of Working Time Regulations) as long as I work 148 hours over a 4 week period, between 07:00 and 18:30 hours I can pretty much work the hours I wish - so effectively, I could work only 4 days each week instead of 5 (I'm contracted for 37 hours per week).

[scoobydooby]

Maternity Leave has also just been changed. A woman (as long as she's worked with the company for 26 weeks at the point when she's 15 weeks prior to the baby being born can have up to 12 months off work. What money she receives depends on company policies and whether or not she intends to return to work. My company pay 90% of pay for a length of time, followed by half pay (which is then topped up with Statutory maternity pay - from the government (employers claim it back) - up to nine months). Therefore, the woman would only be unpaid for 3 months of her leave (but will still have accrued annual leave during this year anyway - so you can add another 4-5 weeks to this). It's very generous!

If you don't qualify for company maternity leave (as not been employed long enough) but you are employed, I think you just get SMP for up to 52 weeks which is about �115 per week??

I'm not 100% sure about the above - it could be even better - much changed last year! I'm about to go off and do some shopping for an elderly relative but if you're as intrigued about the UK as I am the US, have a browse through this site....www.acas.co.uk........it will answer the above for you accurately.

[EngTeach]

Thanks Scooby! It is interesting to see how other countries do things. One thing I'm confused about is Council Housing. Is that like public housing where the gov't pays for all or part of the rent? I also have seen people write about buying their council house. How does that work? Here, one would most likely not want to buy in the areas of public housing. They are usually in "economically depressed" areas.

[scoobydooby]

Each town/city has their own local council who own a number of properties in the area. If you choose not to buy a property, or you cannot afford to buy, you can apply to be put on the housing list. There's usually a long waiting list and you will 'jump the queue' for certain needs (i.e. if you're homeless and you have children). Those who live in council properties will pay anything (in this area) from �30 to �80 per week rent (which is low when you consider that the average mortgage for first timers is approx. �700 per month). Houses/flats are allocated according the the needs of the family and numbers in the family, so a family of three would not get a 4 bedroom house. Council tenants are allowed to decorate their own properties and do home improvements but they are not responsible for repairs. Local councils have their own carpenters, electricians, plumbers etc. Neither do they have to pay for repairs (this is included in their rent). The down side to renting from the council is that you cannot choose where you live as much as you would if you bought your own house and (sometimes) council areas can have high crime rates and be generally untidy.

[scoobydooby]

I expect you've heard of Margaret Thatcher? She was our Prime Minister for a number of years. Prior to the 'thatcher years' buying your own property wasn't necessarily the first option for people. In fact, my grandparents lived in a village where the only people who owned their house were the very rich and the village folk worked for them! 'Maggie' as she was known as, introduced the 'right to buy' and wanted as many people as possible to be able to buy their own house. The idea was that, if you lived in a council property, you could buy it from the council at a discounted price (discounted in proportion to the number of years you'd been a rent paying tenant). This took off in a big way and many council houses then became privately owned. When the buyers came to sell, they didn't have to sell on at a discounted price (although ex council houses do tend to be slightly cheaper) and they made enough profit to be able to move to a more desirable area. Meanwhile, council houses became less available for those who couldn't buy - hence the long waiting lists today.

[scoobydooby]

Many local councils have since 'out sourced' their few remaining properties to other organisations and this prevents the tenants from buying. For instance, there is a housing organisation called the 'Guinness Trust' in this country. They own a number of properties in different areas but as a registered charity, their properties must remain theirs and cannot be bought. However, because they are a charity, they must be non profit making and they often assist tenants financially who want to purchase their own property elsewhere.

[scoobydooby]

No-one lives in a council property for free. Those who are on low incomes or not working will simply claim their benefits through the normal benefit application process in the UK, and they would pay their rent in the usual way. Effectively, they could be living for free because all their income is from benefits. However, the rent money would still have to exchange hands so to speak. Hence the reason why some people struggle on benefits - rent goes up but benefits aren't raised as much. This is very controversial as some people choose not to work and fleece the system for every penny - ending up much better off than those who work very hard for their money!

Finally, there's shared purchase. The councils claim that they've never got any money but the 'out sourced' companies are building properties all the time. Often, when big developers buy up land to build a housing estate, they are given the go-ahead on condition that 10% of the properties are allocated for 'social housing'. There are various shared purchase schemes at the moment. For example, you could (as long as you're on the housing list) buy a house worth �100,000 but only mortgage 50% of it. You would then have a mortgage for �50,000 and pay rent for the other half. You are often allowed to increase the percentage you own as the years roll on and you can afford more. House prices in the UK have gone through the roof in recent years so this is sometimes the only way first timers can get on the property ladder. I sold a 2 bed house 6 years ago for �80,000. It's now worth �142,000 !!!! The 3 bed I now live in was purchased for �112,000 and is now worth �190,000 !!! It's good for us already owing our own houses but not so good for our children who will want to buy someday - unless we pop our clogs early :o))))))

[EngTeach]

Thank you for your informative answer. I don't think the US has program like this for their public housing. I see that we are not the only place to have the flleecers taking more than their share. I was surprised to read that in many other posts. I also like the expression "pop our clogs". A new one for me. Thanks again.