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I GOT OUT OF THE ARMY in August 1969. In the months prior, my wife and I discussed our financial plans. Simply put, if I was given a raise to $160 a week when I returned to work, we could buy some furniture for our small apartment. Bingo—we made it. I was earning $8,300 a year.
The other part of our plan was to save my wife’s salary toward a house down payment. She left the job market for good the following July, when our first child was born. I was going to say she “stopped working,” but that wouldn’t be fair.
In early 1971, we bought a home for $29,000, taking out a 30-year mortgage at 9½%. Our house cost a little over double our 1971 gross income. Based on the average home price and median household income in New Jersey today, a house costs five times income—and we’re mostly talking two incomes. Of course, homes these days are nothing like our 1918 house with a single, tiny bathroom.
In 1972, we bought our first new car, a two-door Plymouth Duster. It cost $2,400. The monthly loan payment was less than $100. There was no air-conditioning and no power anything. For many years, six of us—we had children in 1970, ‘71, ‘74 and ’75—traveled 300 miles every year to Cape Cod in that car. Our daughter sat on a booster seat between us in the front. Yup, in the good old days, we did foolish things, too. We’d probably get arrested today. One August, because of bad traffic, it took us nine hours to do the drive—it usually takes five. Now, that was a family crisis.
Going through some old records, I found our 1971 income tax file. I earned $12,426 as a clerk supervisor, but my adjusted gross income was $12,188, with some interest earnings offset by realized stock market losses. Today, our property taxes alone are $2,000 more than our total 1971 income.
I’ve previously mentioned my early failures at investing. In 1971, I sold 100 shares of a company called Federal Resources for a loss of $797.
Back then, the personal exemption was $675, which—for our family which then numbered four—knocked a whopping $2,700 off our taxable income. Our mortgage interest was $1,475 and property taxes were $771. In 2023 dollars, those property taxes should be some $5,800. But for that house today, property taxes are actually $11,375 and the place is assessed at $384,700 for tax purposes. In 1975, we sold the home for $42,500.
According to my tax return, I paid $31 in interest in 1971—on a margin account. To be honest, I have no memory of that account. Why would someone earning $12,000 a year have a margin account? Did I buy Federal Resources on margin? I hope not.
I also deducted expenses for my belated college education. Tuition and books, along with the travel miles from work to school to home, came to $763. Deducting college travel expenses is a no-no these days. I hope that wasn’t the case in 1971. I traveled 3,200 miles that year going to college. The bottom line: I paid almost $1,001 in income taxes in 1971, for an effective tax rate of a bit more than 8%.
Life was simpler in those days. We actually did live paycheck to paycheck—after always saving something—but doing so seemed to be the norm, not a crisis. Vacations were modest and short. I cut my own grass and shoveled the snow. We even had a nice vegetable garden. My wife was very involved in the children’s school activities. Birthday parties were always at our house, with a homemade cake.
We weren’t poor, but we lived modestly, and we were no worse for it. Actually, I should have been pleased. The median household income in 1971 was $10,290. Who knew we were solidly middle class?
Would I like to go back to the good old days? I think not. Still, there are some things I wouldn’t mind bringing forward to today—like our tax bill and the cost of a car.
Richard Quinn blogs at QuinnsCommentary.net. Before retiring in 2010, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles.
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I was born in 1975. This article rang true for me as well. Our house 24 years ago was 3x salary. I alway like looking at the relative numbers. Thanks Dick!
I agree that the price changes, and in certain sectors is pretty astounding – I have some relatives who purchased some waterfront property in the 70s and it is hard to imagine prices that low, even counting for inflated incomes, etc.
But, I’m a big believer in it matters how you choose to spend money as well.
I haven’t been in the housing market the last couple years, so maybe my experiences are finally no longer valid, but I bought houses in 2003, 2008, and 2012, paying $43K, $88K, and $69K, and all houses were in move-in condition, though the third one we waited six months to update electrical, heating and the kitchen and not have to live in a construction zone.
For the most part, I’ve never been able to convince my friends that this is a better model than getting gigantic mortgages and slowly paying them for decades.
(we’ve also spent $18K on all car purchases since 2001)
Our budget for food used to be $600/month, though that has increased up to $1,000/month in the last year. We have 9 living in the house.
Pretty frugal. I’m betting you don’t live in the Northeast or west coast
I wonder if you paid margin interest because you bought a security before you had the cash available to buy it. Nowadays, I might buy a security before my monthly cash deposit shows up in the account. That will trigger margin interest. I try to avoid this, but sometimes the timing doesn’t work out. Since your interest was in 1971, you probably didn’t have a monthly ACH coming out of your bank account. Who knows?
Prices are all pretty relative to the times, and the products of the luxury products of the 1970’s are merely ordinary products today. Don’t see any cars anymore without air conditioning, and this really was the exception until the early 1980’s. Thank goodness for snow blowers too,shoveling was tough on your back. Like today’s stuff, makes life a bit more comfortable and interesting.
Dick, you were entering adulthood as I was entering grade school, but I recognize your references to the times.. I like having some technology at my fingertips, but I’m dragging my feet on other aspects of our electronic era. I miss some of the simplicity. I appreciate your mention of your garden.
I’m surprised you were able to leave so readily during the policing action in S.E.Asia. I’m sure incentives were on the table for re-enlistment.
Those 72′ Plymouth Dusters were sporty, many are still fetching unreal prices by enthusiast.
Good luck!
I was in the National Guard for four years and then in early 1968 my unit was activated. Most of my unit ended up in Viet Nam. I ended up in Alabama and got an early out to go to college.
That 1972 Duster is still in the family. One of my sons was having it restored, but now has run out of cash to finish it.
Thank you for the sweet journey and for your service to our country, Richard!
In 1969 I was 4, and your housing price was similar to the 32k my parents paid for our newly-built split level. We stayed there until the summer before my 8th Grade (which is a tough time in a child’s life to move, when one is gangly, with a too-short haircut, and braces.) My friends knew and loved me as I was, but I was entering the lion’s den of a new group of girls, where all were expected to be cheerleaders, and were more sophisticated– some were drinking beer already! Mind you, this was only the other side of town, but it could have been Mars. I was a fish out of water.
Our family enjoyed simple driving vacations, when gas cost around 30-40 cents. We went to see the family of my dad’s Army Reserve buddy in St. Louis, (shout out to Six Flags, where I drove my first car.) Another friend had a Michigan lake house, we enjoyed that once. Our biggest splurge was a trip to Mackinac Island. I didn’t fly until I was a junior in high school, and that was because I paid for my own (Spanish Club) trip to Mexico. I actually was invited to be in the cockpit for when we landed. Cool experience for this gal!
I know the 60s were a painful time for many, but they were wonderful to me!
We moved from New Jersey to California in 1965, the year I turned five and started school. We lived in a rental home in Marin County, about 15 miles from San Francisco. In 1970, my parents had the opportunity to buy the home we were renting for $25,000. When my father passed in 2000, my stepmother sold it for over $500,000, and the buyers used it as a teardown, just for the location. (For anyone who knows the area, we could see Mt. Tamalpais from our front yard, and the weather was perfect nearly year round.).
The car we got in the late 60s after we moved to California was a 1960 black Ford Falcon, which my dad bought used. We didn’t get a new car until 1976, a Chevy Nova. We didn’t take vacations at all, really. My dad would get two weeks off every August, and maybe we’d go to the San Francisco Zoo or a local carnival if one was in town. We almost never ate out, and a big treat was getting a pizza on a Friday night.
It was a modest existence, and as a kid I was unaware that I was growing up in what is (was?) one of the most affluent areas in the country.
Dick, thanks for the fun and interesting stroll down memory lane. The comparisons factoring in inflation are especially informative, showing the increases in certain goods and services beyond inflation.
Looking at the $2400 Plymouth, that equates to about $19K today. You could buy a far superior car in terms of safety and reliability. So some things have improved.