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Main => Everything Else => Topic started by: HaRuMaN on March 15, 2011, 02:47:14 pm
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I know the laws regarding credit cards has changed recently, and am not sure how they work anymore.
I have a card that has a balance at 0% APR (it was a transfer). If I currently make a purchase on that card, it will be at the normal 7.99% APR.
So, if I make a purchase (@7.99%) and still have some of the zero APR balance on there, and go to make a payment, which gets paid first?
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I believe the lower interest rate gets paid first
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I know the laws regarding credit cards has changed recently, and am not sure how they work anymore.
I have a card that has a balance at 0% APR (it was a transfer). If I currently make a purchase on that card, it will be at the normal 7.99% APR.
So, if I make a purchase (@7.99%) and still have some of the zero APR balance on there, and go to make a payment, which gets paid first?
sounds like a question out of a math book.
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I assure you whatever is in the banks best interest is what gets paid first. Certainly nothing that could even remotely benefit you. :soapbox:
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Highest interest balances paid first: When consumers have accounts that carry different interest rates for different types of purchases (i.e., cash advances, regular purchases, balance transfers or ATM withdrawals), payments in excess of the minimum amount due must go to balances with higher interest rates first. Common practice in the industry had been to apply all amounts over the minimum monthly payments to the lowest-interest balances first -- thus extending the time it takes to pay off higher-interest rate balances.
The rules were changed so that the consumer would not be automatically disadvantaged by the banks' rules. That's why banks are doing everything possible to come up with new/different fees to charge consumers. They are losing money quickly over these new changes so they have to find new income streams.
http://www.creditcards.com/credit-card-news/help/what-the-new-credit-card-rules-mean-6000.php (http://www.creditcards.com/credit-card-news/help/what-the-new-credit-card-rules-mean-6000.php)
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or here is another alternative:
PAY CASH!
Im on the Dave Ramsey plan, pay cash! So far, Im debt free except the house and if we stay on the plan, it will be paid off in the next 6 months. Then we work on the retirement plan!
Credit cards are for some fat cat banker getting richer while you get poorer!
I used to be in the credit card trap as well, I just got tired of working for someone else. Heard Dave Ramsey on the radio one day and from there, we have been working hard to be debt free!
Fordman
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Credit cards are for some fat cat banker getting richer while you get poorer!
I used to be in the credit card trap as well, I just got tired of working for someone else. Heard Dave Ramsey on the radio one day and from there, we have been working hard to be debt free!
Fordman
It's only a trap if you don't pay it off each month interest free. If you pay it off responsibly, then it's better than cash because you get airline tickets for expenditures you would normally have anyway.
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Credit cards are for some fat cat banker getting richer while you get poorer!
Why pay cash when the banks are willing to pay you to use their card?
I use a rewards card to pay for practically everything, including all my monthly bills. Then I pay the balance off a month later (free loan from the bank behind the card) and every time I hit 5000 points I turn it in for a $50 credit on my statement.
It's not a lot of money (1-3% depending on where I use the card) but as long as they're willing to pay me I'll keep taking it.
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Why pay cash when the banks are willing to pay you to use their card?
Mostly because cash is a relatively zero risk proposition. You're not running up a balance to be paid at the end of the month. The risk of running that up and something odd happening so you can't pay it off within the cycle does exist.
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What's the risk? Its non secured, non-recourse debt? The worst that could happen to you is that you get some collections phone calls and it hurts your credit.
But if you already have a house and a car, what difference does it make? Those are the main things you need credit for, other than those two things, who cares? Lets say worst case scenario, you over-leverage your credit cards and default. You spend 3 grand on a bankruptcy, the debt is gone, you just can't buy a house or a car for the next 3-5 years.
Only makes sense to pay cash for things you use right now, I have my car financed at 1.9% over 60 months, that's less than what inflation usually is. Instead of paying cash for the car, I financed it, put the rest of the money in an index fund where I expect it to earn between 5 and 10% a year. Its a no brainer.
Why are you paying off your house? My house is financed at like 5%, but I get a tax break for the interest I pay on it, so the effective rate is 3.25 % since I am in the 35% or so tax bracket. You would be much better off financially if you invested that money, its EASY to beat a 3.25% return, not to mention that the earlier you stock away your money, the greater the impact of compounding. People always talk about the "enormous amount of interest" you pay on a house over the course of a 30 year loan, but most people don't live in their houses for 30 years, most sell way before that time is up, and even if you DID stay in your house that long, interest rates are so low right now that you can get a fixed 4%
Leverage it awesome, if you know how to manage it.
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"its EASY to beat a 3.25% return......"
I'm having trouble with this easy part....
actually, if you can manage your money at about 5% annually, you are already better than MOST fund managers...
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Im on the Dave Ramsey plan, pay cash! So far, Im debt free except the house and if we stay on the plan, it will be paid off in the next 6 months.
Good for you. I am pretty much at the same point. Living debt free can not be measured, it is such a great thing/feeling.
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Why pay cash when the banks are willing to pay you to use their card?
Mostly because cash is a relatively zero risk proposition. You're not running up a balance to be paid at the end of the month. The risk of running that up and something odd happening so you can't pay it off within the cycle does exist.
That doesn't make sense. If I buy the same amount of stuff on credit as you buy with cash, that "odd happening" that keeps me from paying off the entire balance would be a bigger problem for you, since your cash is already spent. I would have the option of paying a month of interest while still covering that "odd happening". You'll need to borrow the money and you may not have the luxury of finding a reasonable rate on short notice.
But I don't operate without emergency reserves (as you shouldn't whether you pay in credit or cash), so it's all the same to me.
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Yeah, being debt free is definitely one of the perks of not going to college for sure.
Not necessarily. Some people have parents who pay for it. Others get grants or use the military, etc.
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Why are you paying off your house? My house is financed at like 5%, but I get a tax break for the interest I pay on it
Wow, so you'd rather pay a bank/mortgage company $20,000 a year for a $10,000 tax deduction? Seems like your $10,000 in the hole! No Thanks! I'll take the paid for house.
Let me see, paid for house means no chance of foreclosure, if sold, all the money goes to me (and taxes if I dont buy another house within a year), lower insurance rates and the house is MINE!
Fordman
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Ugh... I HATE it when people don't read properly. No I don't pay interest for a tax deduction. The tax deduction lowers the effective interest rate on the loan. If you look at the return on debt, it's essentially the interest rate. If you have credit card debt, pay it off since that is a 17% interest rate and essentially you are not goin to get a 17% return on anything else, except maybe a small business, so it makes sense to pay off credit cards. UNLESS you are financing a business through it that you expect to earn a better return on, OR unless the item you are purchasing brings some greater non economic satisfaction that hydroids it's overall cost to you.
Paying off your house makes little economic sense, the effective the effective rate of your loan, due to the interest rates means it's easier to find a better use for that money. I dont Carr about foreclosure, it's non recourse where I live, plus I bought smar and have equity so even IF I somehow couldn't pay
my mortgage, I could sell my house and pocket some cash. Who cares if you get foreclosed on? It just means you have to move, and rents are really cheap now anyway.
So you are saying that you are going to pay off your house, guaranteeing yourself a net 3% return, when instead you could easily invest that money in an index fun and earn 5-7%. You really think this is good money advice?
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Maybe the psychological relief of paying off a house is better than the extra 2% you could make in an index fund?
Pretty much. Your primary residence is not an investment. It's a home. It can't be viewed as equivalent to an investment fund or other real estate. Your lifestyle is dictated in so many ways by the location, style, and size of your home that it has to be as much psychological as economic. 2% in either direction is meaningless compared to being safe and secure in your own residence.
Trust me, that "odd event" that screws up all your plans can happen at any moment. People like to put their head in the sand and ignore their mortality but all it takes is one accident or bad news from the doctor. Leveraging short term debt for absolute maximum return is fine so long as nothing goes wrong but a cash only lifestyle is just as good and feels better to those who are used to being on the ugly side of debt. I have heard so many people say "well I could just sell my house and cash out" only to discover they actually can't sell their house when it comes time because the only buyers are offering 60% of value.
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Be liquid and buy gold. :applaud:
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Why pay cash when the banks are willing to pay you to use their card?
Mostly because cash is a relatively zero risk proposition. You're not running up a balance to be paid at the end of the month. The risk of running that up and something odd happening so you can't pay it off within the cycle does exist.
That doesn't make sense. If I buy the same amount of stuff on credit as you buy with cash, that "odd happening" that keeps me from paying off the entire balance would be a bigger problem for you, since your cash is already spent. I would have the option of paying a month of interest while still covering that "odd happening". You'll need to borrow the money and you may not have the luxury of finding a reasonable rate on short notice.
But I don't operate without emergency reserves (as you shouldn't whether you pay in credit or cash), so it's all the same to me.
I totally agree - I use my credit card to pay for EVERYTHING. I'll buy a pack of gum at the store and use the card if I can. I've also never ever missed a monthly payment (I only spend what I have) so interest is of zero concern to me. Plus, I get free gifts from just using my card! Right now I've got about $500 coming to me for the next time the family goes to Disney - it adds up!
The only debt I carry is on my house and it is unrealistic for me to think I can pay it off in less than 30 years but I don't look at it as an investment...
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...or noting that the price of gold is at or near an all time high.
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At my Cantina we have liquid gold night.
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At my Cantina we have a plethora of pinatas.
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maybe he meant buy crude oil, also knows as black gold, which is a liquid, which we used to use at my Cantina for crude oil wrestling nights on Wednesdays
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I have shares in a big bank- EVERYBODY, USE CREDIT CARDS!! ;D
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Be liquid and buy gold. :applaud:
Maybe one should look at the term 'liquid' a little better. Liquid means 'CASH' not investment(s).
For those that are on the 'buy gold' kick. Take that 1oz flake of gold to the market and buy bread with it. See how far you get out the door. I dont understand the gold market when our currency is backed by our gold. if gold is worth alot, then the currency is worth alot.
Also, to those that want to keep paying a mortgage, keep doing just that, I'll pay my house off. I dont risk foreclosure if payments arnt made. Renting is the same as a mortgage payment, just for the guy owning the rental unit. Over 80% of the U.S.'s rental units are mortgage free and its all pure profits for the rental owner. As for rent being 'cheap', I dont know where you live, but as forclosures went on the rise here, the rental rates went up because of all the people losing their homes and needing a place to go.
Fordman
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I know the laws regarding credit cards has changed recently, and am not sure how they work anymore.
I have a card that has a balance at 0% APR (it was a transfer). If I currently make a purchase on that card, it will be at the normal 7.99% APR.
So, if I make a purchase (@7.99%) and still have some of the zero APR balance on there, and go to make a payment, which gets paid first?
More than likely your 0% APR is a promotional rate for so long (6 months, a year, maybe more). After the promotion is over the interest rate would go up on your balance transfer. And if it's a crappy enough credit card company, they may even prorate interest if the balance transfer wasn't paid in full by the end of the promotion. Leaving you to pay interest on ALL of the original balance transfered. As far as purchases, your payments would go towards your purchases first. The credit card company wants you to go over your promotional period of your balance transfer so they can at least make some money off of you from that "deal." I would recommend not making any purchases on that card until your balance transfer is paid off.
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He probably also paid a balance transfer fee, and if you do the math, you "paid the interest" anyway.
No balance transfer fee, it's a credit union credit card, with good policies and good APR.
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I dont understand the gold market when our currency is backed by our gold.
The dollar hasn't been backed by gold in decades. It's backed by empty promises and wishful thinking nowadays.
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http://en.wikipedia.org/wiki/Fiat_money (http://en.wikipedia.org/wiki/Fiat_money)
And I believe that Nixon took the US off of the gold standard.
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I dont understand the gold market when our currency is backed by our gold.
The dollar hasn't been backed by gold in decades. It's backed by empty promises and wishful thinking nowadays.
Technically, it's back by the US Treasuries that are sold on a regular basis. So, technically, the dollar is backed by China. As the US has never (yet) defaulted on a Treasury, Treasuries (bills, notes, and bonds) are still considered risk free investments.
For now.... :o
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Practically, the dollar is backed by the National Debt. :puke
That is a wonderful feeling.
Historically man has always valued gold. In the immediate aftermath of a natural disaster gold might not carry much value but it would if the situation continues any length of time. Gold and precious jewels, for whatever reason, are always the default monetary unit in the absence of gov't.
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If there's a total breakdown in world currencies, I think it would make more sense to be heavily invested in ammo.
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If it's that bad you may as well hide. Anyone who has something everyone else needs is going to be outnumbered to the point where every shot you take is going to be returned ten times. Hide with your supplies and wait for the first wave of people to knock off. People on meds they can't live without, people who didn't save anything and kill each other over anything visible, and people without any practical skills will all be gone quickly.
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If it's that bad you may as well hide. Anyone who has something everyone else needs is going to be outnumbered to the point where every shot you take is going to be returned ten times. Hide with your supplies and wait for the first wave of people to knock off. People on meds they can't live without, people who didn't save anything and kill each other over anything visible, and people without any practical skills will all be gone quickly.
Thats a very survivalist approach. I hope that doesnt happen in my life time. Then again, being here for the steady decline would be just as bad. Would you rather be taken out by the nukes, or live to fight the machines?
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Thats a very survivalist approach. I hope that doesnt happen in my life time. Then again, being here for the steady decline would be just as bad. Would you rather be taken out by the nukes, or live to fight the machines?
It's starting to look more like cyclic climate change is going to be what does modern society in. Maybe it has already started. Move away from the coast!
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Thats a very survivalist approach. I hope that doesnt happen in my life time. Then again, being here for the steady decline would be just as bad. Would you rather be taken out by the nukes, or live to fight the machines?
It's starting to look more like cyclic climate change is going to be what does modern society in. Maybe it has already started. Move away from the coast!
How did a discussion on credit cards get here? lol... :droid
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If it's that bad you may as well hide. Anyone who has something everyone else needs is going to be outnumbered to the point where every shot you take is going to be returned ten times. Hide with your supplies and wait for the first wave of people to knock off. People on meds they can't live without, people who didn't save anything and kill each other over anything visible, and people without any practical skills will all be gone quickly.
My boss is well prepared for when it all goes to hell and he says I'm welcome to stay at his house if I'm able to survive the trip to it. He says he has more ammo then he could possibly ever shoot in his lifetime, but has that much because he expects all his friends to fall back to his place and is making sure theres plenty of ammo for everyone. I'm not expecting things to get that bad in my lifetime, but at least now I have a destination to run to in case it does :P
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Thats a very survivalist approach. I hope that doesnt happen in my life time. Then again, being here for the steady decline would be just as bad. Would you rather be taken out by the nukes, or live to fight the machines?
It's starting to look more like cyclic climate change is going to be what does modern society in. Maybe it has already started. Move away from the coast!
NOOOOOO!!! I live in San Diego!!! :scared
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If it's that bad you may as well hide. Anyone who has something everyone else needs is going to be outnumbered to the point where every shot you take is going to be returned ten times. Hide with your supplies and wait for the first wave of people to knock off. People on meds they can't live without, people who didn't save anything and kill each other over anything visible, and people without any practical skills will all be gone quickly.
My boss is well prepared for when it all goes to hell and he says I'm welcome to stay at his house if I'm able to survive the trip to it. He says he has more ammo then he could possibly ever shoot in his lifetime, but has that much because he expects all his friends to fall back to his place and is making sure theres plenty of ammo for everyone. I'm not expecting things to get that bad in my lifetime, but at least now I have a destination to run to in case it does :P
This sounds like my dad's house. I know if it ever hits the fan, that's where I'm going, lol...
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Definitely not place in MA... around here they'd consider you a terrorist even if it was all licensed and accounted for.
"Nobody could possibly have a productive use for that much weaponry. Thus we should seize it from them."
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If it's that bad you may as well hide. Anyone who has something everyone else needs is going to be outnumbered to the point where every shot you take is going to be returned ten times. Hide with your supplies and wait for the first wave of people to knock off. People on meds they can't live without, people who didn't save anything and kill each other over anything visible, and people without any practical skills will all be gone quickly.
My boss is well prepared for when it all goes to hell and he says I'm welcome to stay at his house if I'm able to survive the trip to it. He says he has more ammo then he could possibly ever shoot in his lifetime, but has that much because he expects all his friends to fall back to his place and is making sure theres plenty of ammo for everyone. I'm not expecting things to get that bad in my lifetime, but at least now I have a destination to run to in case it does :P
Be sure to get a clear definition of what your boss means when you he says that he is saving ammo for any friends that fall back to his place after everything goes to hell. These things take on a different meaning when it comes to post apocalyptic survival. ;D
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Be sure to get a clear definition of what your boss means when you he says that he is saving ammo for any friends that fall back to his place after everything goes to hell. These things take on a different meaning when it comes to post apocalyptic survival. ;D
Post-apocalyptic etiquette says if you're going to visit a well-armed friend, call first.
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Not many Mormons here. I might be able to hitch a ride with the Jehovah's Witnesses, though. They are all over the place.
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"the only winning move is not to play"
I choose not to participate as money really only matters when you're in debt. Do that & you wont ever give a ---steaming pile of meadow muffin--- what any given index is doing.
There are a ton of people with low 30-year fixed rate mortgages which they are upside down on while holding 401k's & other assets worth squat @ an unstable job they previously thought would last forever (ie 30 year financing takes serious bolas in my book). These were the same "oh yeah I'm gonna borrow to invest" folks that parade BS tax write offs & unreliable optimistic ROI's on instruments they do not understand. IMO Leverage only if you are the savvy investor who dumps his money into developments of hotels in Dubai, not some sucker Fidelity account. If you have $500k in assets & $400k in debts you are not doing so hot there ballers ;D Never forget true wealth is determined by subtracting your liabilities from your assets....not what you hope the market does for you in the future (speaking of what will our fiat currency do in 20 years). PS America is THE place to live, I'm just thinking we should all make a few little changes to preserve it.
To think a corrupt & complex financial global market would just bend over & take it up the corn for the average worker man Joe on the day he finally decides to cash in his chips & get out is a self righteous ignorant typical American consumer borrowing assumption & entitlement thought process that burned many "its just gotta work I tell ya its just gotta". Might as well quit smoking the day before you get cancer too eh?
Read up on the Tulip crash of Holland, the stock market crash of 1929 & the EVERYTHING crash of today. Then all you gold & currency hounds should get all NWO & read up on 1913 (federal reserve & IRS creation the day before Christmas eve). Whoever said to stock up on ammo is right, learn to fly a plane too. Ammo guarantees you food/drink/plane & a plane will get you to whatever states are still functioning before they put up guard towers :cheers:
Anyway credit cards can be a financial tool if done correctly FYI so be creative, not a Nordstrom & apple store shopping credit whore. Do whatever it takes to get in the clear & start saving acorns!!!!
In the end we all think we are experts but none of us have jets, yachts or a hot 19 year old toot princess from Russia so we should prob just delete this entire thread & never listen to each other ever again.
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If the fit hits the shan, just look up the mormon surnames in your phone book.
Like SMITH?
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My new definition of true wealth is having a 19 year old toot princess from Russia.
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My new definition of true wealth is having a 19 year old toot princess from Russia.
:laugh2: :laugh2: :laugh2: :applaud: :cheers:
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.....
So you are saying that you are going to pay off your house, guaranteeing yourself a net 3% return, when instead you could easily invest that money in an index fun and earn 5-7%. You really think this is good money advice?
Again, what you stated above is WRONG... at least wrong for probably 80+% of the general public...
you maybe able to make 5-7% easy.... but most general public does not...
as a simple example,
you mentioned index fund, so I picked the most obvious one... S&P500 ETF SPY...
if you buy S&P 500 ETF (SPY) on 2000 (10 yrs ago), you will be under water now, and no 5-7% return whatsoever...
so, just because you're good and/or lucky that you make 5-7% annually, it doesn't happen to everyone. and majority people does not make that...
for most people, paying off mortgage first is a better choice...
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If the fit hits the shan, just look up the mormon surnames in your phone book. They're required to have months of supplies on hand and will be more than happy to sell you a few blond wives to repopulate the earth.
Yeah but they wont have any soda
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With 5 blonde wives you don't need soda. You've either got a lot of repopulating to do or you have no place to sleep because you were dumb enough to get married 5 times.
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If you have $500k in assets & $400k in debts you are not doing so hot there ballers ;D
I always thought the further you are in debt when you die, the further ahead you got in life. ;)
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as a simple example,
you mentioned index fund, so I picked the most obvious one... S&P500 ETF SPY...
if you buy S&P 500 ETF (SPY) on 2000 (10 yrs ago), you will be under water now, and no 5-7% return whatsoever...
If you cherry-pick the numbers you can make them say anything you want. Using the value at open on 4/1/2001 ($116.3) it's up 10%, which is still a poor investment for such a long term, but a lot different from being under water.
I'd rather pick a time like November/December 2008 (around $85-$95) when I jumped on a weak market and dumped nearly all my "safe" investments for various mutual funds. If I'd been paying down my mortgage instead of building up reserves I would have missed out on greater than 20% returns across the board.
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You guys are forgetting about dividends...
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You guys are forgetting about dividends...
Are they a factor? I don't have any investments that pay dividends in any significant amount.
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You guys are forgetting about dividends...
Are they a factor? I don't have any investments that pay dividends in any significant amount.
They can be... I have some stock that pay dividends that I just reinvest right back into the stock.
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the average dividend yield for S&P stocks is about 2%, so you would benefit from the dividend, plus any appreciation in the stock when you sell. Lets say I bought 100 bucks of S&P stocks ten years ago, I would get 2 bucks in dividends per year. That's 20 bucks. Even if the stock is down 15%, I have made 5% on my investment, that is without re-investing the stock. ... it makes a difference, especially when you consider that an investment in say, something like gold or another commodity pays no dividends and is subject to pure speculation, plus transaction costs; you can frequently find index etfs that trade commission free. Savings accounts now go for what, 1%? If inflation is running at about 2.5% so you are losing money keeping it in the bank
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Then you pay a chunky capital gains tax that you would not be paying when selling the primary residence you could have paid off instead.
Money can be made either way and it's all up to an individual's comfort levels with any given approach. You could also pass on securities, not pay off your mortgage early, and buy investment real estate instead. Or use it as capital to start your own business or provide capital to someone else to start a business. There are tons of ways to invest and trying to compare them with hypotheticals could last forever without actually proving anything.
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capital gains is 15% off of profit. You are assuming that you are selling your house for more than what you bought it for, hard to believe, especially considering the enourmous cost and time to sell.
I agree with you on the hypotheticals, I am just saying, paying off your mortgage is probably just about the worst investment you could make. There is not much upside, the downside is that you have now spent a boatload of money on an asset that is not appreciating, and in many cases, is depreciating in value.
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So putting it all on black at the casino isn't a sound investment strategy?
I honestly don't know what I'm doing when it comes to this stuff but you people talking about not carrying a mortgage are either nuts or wealthy. It's just not realistic - especially where I currently live. I guess if I wanted to move to Middle of Nowhere, USA I could swing a very cheap house but there's just no way the average person can afford less than a 30 year mortgage. I mean, the average person can't even keep themselves out of credit card debt never mind being fiscally responsible enough to quickly pay off a house.
I've been in my house for 7 years and I just refinanced a second time so I'm back up to 30 years but the monthly payments are almost $1,000 less than where I started. Sure I'll be paying more in interest long term but the extra $1,000 a month helps me and my family live a little more comfortably NOW. I might refinance again if it made sense. Once the kids are out of college I'll probably be able to pay down the mortgage much quicker but for now I think I'm doing OK.
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number one rule in finance: its always better to use other people's money. There is nothing wrong with using leverage.
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I've been in my house for 7 years and I just refinanced a second time so I'm back up to 30 years but the monthly payments are almost $1,000 less than where I started. Sure I'll be paying more in interest long term but the extra $1,000 a month helps me and my family live a little more comfortably NOW. I might refinance again if it made sense. Once the kids are out of college I'll probably be able to pay down the mortgage much quicker but for now I think I'm doing OK.
Do a little reading on amortization periods so you understand why you're setting yourself back with each refi. It's an important concept to grasp if you are refinancing every 3-4 years.
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he's not setting himself back if he's using that capital to bring back a greater return then the present value of the future interest payments. The future interest payments might not even matter because he could 1) sell before then; or 2) walk away and not pay them.
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If he's talking about the inability to escape credit card debt he's not going to be bringing back a greater return. He's going to be folding in consumer debt to lessen the interest going out.
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I honestly don't know what I'm doing when it comes to this stuff but you people talking about not carrying a mortgage are either nuts or wealthy. It's just not realistic - especially where I currently live. I guess if I wanted to move to Middle of Nowhere, USA I could swing a very cheap house but there's just no way the average person can afford less than a 30 year mortgage. I mean, the average person can't even keep themselves out of credit card debt never mind being fiscally responsible enough to quickly pay off a house.
Sure, but the average person buys a lot of stuff they don't really need, and probably a much nicer/bigger house than they need. When I was house hunting they approved me for 3 times the mortgage I ended up with and tried to steer me toward homes I didn't need. Most of my friends ended up in much more expensive homes and live paycheck to paycheck.
The American Dream can be pretty expensive, but a big tv in every room of an oversized house isn't mandatory.
I realize there are some parts of the country where housing is just ridiculous. Sometimes your best financial move is to move to a better location.
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I think the best financial move is to leverage to the max and blow it all on cristal and hookers in Barbados. They can repossess your house, they can't reposses your vacations.
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if that is your finance rule...
then you should go margin, and bet on the triple leverage ETF..... lol....
or better yet... for biggest leverage, just trade futures...
you pretty much go rich instantly....
(or go broke....)
yeah... picking a particular time isn't exactly the theory I talked about...
for the normal investor... its more like you invest constantly...
so, every month, you save up like $100 and buy a certain shares of index fund...
if you did that for the past 10 yrs... you're not really moving ahead 5-7% annually...
for most people, paying off mortgage give them a constant and certain 3% gain...
while if they decide to invest... MOST PEOPLE (me included) can and will do much worse...
I'm not saying don't invest, or definitely pay off your mortgage...
(its different for each person... their risk tolerance, preference, and knowledge on the subjects...
but for most people, they don't know head of tails on the market...
its really better off for them to pay off mortgage first...
and its not like Donkbaca said, leverage up and invest in index fund and you get 5-7% annual return...
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Yeah, that is what you should do, borrow to the hilt, invest in things that are more risky then the rate you are borrowing money at. But you shouldn't borrow it all and bet on black :) Just because you are borrowing does not mean you are being reckless.
The average return on large cap stocks, accounting for appreciation and dividends from 1926 through 2008 is 11.7%
Paying off your mortgage is NOT a 3% gain though, unless you plan on living there for 30 years. I sure as heck wouldn't want to pay off my house NOW, why sink extra money into an asset that is depreciating at worst and stagnating at best?
Credit card debt, on the other hand is horrible, UNLESS you do some serious gymnastics whereby you take advantage of balance transfers to get your rate down crazy low and have points/cash back.
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??? WTH? What's this thread doing on topic again? ;D
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You guys are forgetting about dividends...
Are they a factor? I don't have any investments that pay dividends in any significant amount.
They can be... I have some stock that pay dividends that I just reinvest right back into the stock.
Same.
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For those that want to keep paying someone else to carry your debt, go right ahead and do it. When my home is paid off (im not wealthy-$60,000 a year job) and the money I bring home goes into my savings account, I then become a winner with my money.
I havent used credit cards in 5 years. I do have a debit card with Mastercard logo on it, but the money comes right out of my bank account.
When you have a debt to someone else, in a sense, you have become "a slave to the lender". Im tired of working for someone else, Im working for me and my family!
Fordman
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For those that want to keep paying someone else to carry your debt, go right ahead and do it. When my home is paid off (im not wealthy-$60,000 a year job) and the money I bring home goes into my savings account, I then become a winner with my money.
I havent used credit cards in 5 years. I do have a debit card with Mastercard logo on it, but the money comes right out of my bank account.
When you have a debt to someone else, in a sense, you have become "a slave to the lender". Im tired of working for someone else, Im working for me and my family!
Fordman
You're missing the point. Regardless of what you think or what you heard on a radio show, you incur a cost when you pay off debt. The economic term is "opportunity cost". Whenever you do anything with your cash, whether its buy something that's necessary (food, clothes, shelter) or something that you want (hookers, video games, internet access) you lose the chance or opportunity to use those funds somewhere else. With a limited number of resources, you can only buy so much stuff with your cash.
In your situation, you're losing a return on the cash that you're paying towards your mortgage means your'e not investing that cash. Yes, you are definitely lowering how much you're paying in interest but you are also limiting how much you may earn on that cash via interest, investment appreciation, dividends etc. Missing out on that is the cost of paying off your mortgage sooner.
That's not to say you are wrong to do it. It's a personal decision as others like Chad have said. For your situation, it meets your comfort level and your goals. It doesn't mean it is right for everyone.
I'll just suggest that you should meet with a financial advisor and have him/her put your financial information into a model to show you the "real" cost of your decision. You are, potentially, missing out on not just a 2-3% return this year, but the effect of having that return compounded year over year. Yes, it's a variable as far as the return, but historically almost all situations show that it's better to have your money in the market working for you and having your mortgage at the same time.
It's not always an easy concept to grasp the first time whether it's an article on-line, some schmuck telling you on a message board, or listening to someone on the TV or radio. I've found in dealing with clients or in my own finances, that I need to see the numbers side by side to see what's best for me. Any reputable financial advisor will have the ability to changes multiple variables to show you what your financial situation would be like in 5-10-20-30 years based on various return rates.
Regardless of anything else, I strongly suggest you meet with someone who can work with you on this. Financial advisors aren't just for the wealthy. They can help people become wealthy or more carefully manage their funds.
And no, I'm not a CFA or in the financial sector any longer. I left about 7 years ago and run a non-profit foundation. I have no dog in this fight anymore.
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Do a little reading on amortization periods so you understand why you're setting yourself back with each refi. It's an important concept to grasp if you are refinancing every 3-4 years.
I know I pay more in the long run but in 30 years my mortgage payment shouldn't seem like too much due to inflation. When my parents bought their house back in 1981 they really stretched themselves but the last 5 years of the mortgage were a joke because the payments seemed so low relative to the cost of things at that time.
he's not setting himself back if he's using that capital to bring back a greater return then the present value of the future interest payments. The future interest payments might not even matter because he could 1) sell before then; or 2) walk away and not pay them.
yeah - I mean I invest and stuff but really the extra money I'm saving each month just ensures I can survive if I were to lose my job or it helps me buy crap that the kids need, etc. I also max out my 401K and we have 529 plans for the kids.
If he's talking about the inability to escape credit card debt he's not going to be bringing back a greater return. He's going to be folding in consumer debt to lessen the interest going out.
I have ZERO debt (other than my mortgage). No credit cards (I pay the balance monthly), no car loans (both cars are paid for) and no student loans (paid those back already).
I think I'm doing the right thing but I honestly don't know (and my CPA wife is in charge of the finances for the most part). There is a part of me that wants to just say screw it and spend it all but I don't think I'd be able to sleep at night. ;D
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historically almost all situations show that it's better to have your money in the market working for you and having your mortgage at the same time.
You can't say that without knowing his age. The closer you are to retirement age the riskier the market becomes. How many people were about to retire 3-4 years ago and now cannot because their entire retirement portfolio was in various forms of the stock market? Those people don't have time to wait for the correction to average back out to a 10% anuual return. They needed their money now and the recession wiped it all out. If those people had paid off their mortgage they'd be in much better shape when retirement came around. Historical averages are great for people who have the luxury of time. They mean a lot less to a 65 year old who may never be able to retire as it stands now.
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historically almost all situations show that it's better to have your money in the market working for you and having your mortgage at the same time.
You can't say that without knowing his age. The closer you are to retirement age the riskier the market becomes. How many people were about to retire 3-4 years ago and now cannot because their entire retirement portfolio was in various forms of the stock market? Those people don't have time to wait for the correction to average back out to a 10% anuual return. They needed their money now and the recession wiped it all out. If those people had paid off their mortgage they'd be in much better shape when retirement came around. Historical averages are great for people who have the luxury of time. They mean a lot less to a 65 year old who may never be able to retire as it stands now.
Based on his past posts, he's about 40. I factored that in.
And you're taking it out of context. I said repeatedly that he should work with someone to see the numbers. If his time horizon was 5 years or 25 years, it gets factored into the model.
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Me or Fordman? I'm 36. Plenty of time before retirement.
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Me or Fordman? I'm 36. Plenty of time before retirement.
I was talking about Fordman.
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Go a friend who is a senior financial advisor. I've heard enough horror stories about rookie advisors dunking large sums of peoples savings because they recommended heavily investing in junk shares from obscure Russian companies or whatnot to their clients. I think anytime you invest a substantial amount of your savings you need to pay attention and be careful of any advice you get, because even a financial advisor can screw up your portfolio.
Not saying it's dumb to invest, and I am definitely not saying there is a guarantee you will ever get your home investment back either (though your home is insured, at least). But market investing takes a bit of time and care, making that additional payment on your mortgage is all of 30 seconds and can often yield the same ROI.
Either way works, YMMV :dunno
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As far as debt goes, we have a mortgage, my wife's undergrad student loan (which is like $20K @ 1.x % APR), and under $1K on our credit cards. No car loans, no store credit cards, etc. My wife is getting her Masters now, and we've been paying that ourselves (no loans).
We use credit cards to our advantage, using only ones that give us cash back, etc. Generally we pay them off each month, unless we have a promo 0% APR, in which case we leave the money in an interest bearing savings until just before the 0% APR runs out on the credit card, then we pay off in full.
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As far as debt goes, we have a mortgage, my wife's undergrad student loan (which is like $20K @ 1.x % APR), and under $1K on our credit cards. No car loans, no store credit cards, etc. My wife is getting her Masters now, and we've been paying that ourselves (no loans).
We use credit cards to our advantage, using only ones that give us cash back, etc. Generally we pay them off each month, unless we have a promo 0% APR, in which case we leave the money in an interest bearing savings until just before the 0% APR runs out on the credit card, then we pay off in full.
All sound cash management techniques.
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FWIW, I'm closer to Fordman's strategy than the credit card folks. I haven't had a credit card in years. My only debt is my truck and my house. Wife's car has no lien. I pay cash for everything and if I can't it doesn't get bought. I have a Mastercard ATM card for online transactions. Sometimes I consider opening up a $750 limit credit card to make it easier to rent cars and make online reservations. I own a token amount of stock from a former employer and contribute the % of salary to 401k that gets me the maximum employer match (immediate 100% return).
I'm not accelerating my mortgage, though. I'm in a 15 year with a very low rate so that's quick enough for me. Any excess cash I get goes into a capital fund that will eventually be the down payment on investment real estate. My goal is enough passive rental income each month to make two sets of student loan payments - my two elementary school age kids.
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Any excess cash I get goes into a capital fund that will eventually be the down payment on investment real estate. My goal is enough passive rental income each month to make two sets of student loan payments - my two elementary school age kids.
I've thought about doing this but I'm afraid of deadbeat tenants or having to constantly fix stuff (I don't have the time). If I could maybe a buy a 4 unit apartment building somewhere and make the combined rents enough to pay down the mortgage and then some that would be sweet.
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My goal is enough passive rental income each month to make two sets of student loan payments - my two elementary school age kids.
Be sure to talk to a lot of rental property owners in MA beforehand. Lots of headaches. Of the property owners I know personally all have had tenants quit paying rent. In our state it takes forever to get them out.
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FWIW, I'm closer to Fordman's strategy than the credit card folks. I haven't had a credit card in years. My only debt is my truck and my house. Wife's car has no lien. I pay cash for everything and if I can't it doesn't get bought. I have a Mastercard ATM card for online transactions. Sometimes I consider opening up a $750 limit credit card to make it easier to rent cars and make online reservations. I own a token amount of stock from a former employer and contribute the % of salary to 401k that gets me the maximum employer match (immediate 100% return).
It'd be a good idea to get a real credit card for online purchases for your own safety. If there's fraud on a debit card you lose the money up front and have to file a fraud complaint to get it back. If you use a credit card as long as you file a complaint before the interest is due it's pretty painless and there's no risk of bounced check fees.
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It'd be a good idea to get a real credit card for online purchases for your own safety. If there's fraud on a debit card you lose the money up front and have to file a fraud complaint to get it back.
Last year someone stole my wife's Mastercard number (same account). I found 3 charges that were not ours. Our bank had them reversed within 24 hours of my phone call. They handled the rest of the process without my involvement. It was just as painless as a credit card chargeback.
I've thought about doing this but I'm afraid of deadbeat tenants or having to constantly fix stuff (I don't have the time). If I could maybe a buy a 4 unit apartment building somewhere and make the combined rents enough to pay down the mortgage and then some that would be sweet.
Agreed. I'm still trying to decide if I should buy a townhouse and rent that out to build property management experience. If I ever get to a place where I have something like a 4 unit building I'll end up hiring a property management company. It does lower profit but it takes a lot of that time sinking work out of your hands and into the hands of people who get paid on a percentage basis. It gives them incentive to not only be efficient but help maximize revenue if you choose a quality company to do it.
I'm not saying this approach is any better than any other approach. It is the approach I am most comfortable with and with which I think I have the greatest chance of success.
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Im 41 years old, I have a $60,000 (US) a year job. My cars (2004 F150, 2005 Escape and 1994 Escort) paid for, my home is 5 months from being paid for (built in 2002), no credit cards, I have a true 30 and out pension plan that I can retire at age 54, a 401 k with NO company match (because we have a pension plan) that now I put 20% of my pay into. I also contribute to United Way and March of Dimes.
Wife, 5 kids, 6 fish and 1 dog. No health problems (a little over weight), works little to no overtime.
Its all about watching what we spend and what we need vs. what we want. I have found out that if we save our pennies a few weeks, we buy what we want. We dont watch movies in theaters, have very basic cable, we use store brands, shop at yard sales and Im not afraid to ask for a discount.
Now for the hypocritical part of my life, I work for a manufacturer that requires 99% of their sales to John Q. Public be financed.
When my home is paid for, I am going to help my mom get her home paid for. She has been paying on the same home for 49 years now because of all the refinancing over the years. Everytime she re-fi's, it starts her over again. She likes the lower payment, but now she's been paying on the same home for 49 years! 19 years longer than the original pay-off date!
Fordman
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Your information is completely wrong.
Really? You didn't contradict anything I said. All you did was add detail, some of which is wrong (specifically getting charged overage fees on a credit card that were caused by fraud).
Last year someone stole my wife's Mastercard number (same account). I found 3 charges that were not ours. Our bank had them reversed within 24 hours of my phone call. They handled the rest of the process without my involvement. It was just as painless as a credit card chargeback.
Would it have been as painless if your mortgage check bounced before you noticed the charges?
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Would it have been as painless if your mortgage check bounced before you noticed the charges?
It's a fair point. That's part of why I am often tempted to set up a low limit credit card.
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Im 41 years old, I have a $60,000 (US) a year job. My cars (2004 F150, 2005 Escape and 1994 Escort) paid for, my home is 5 months from being paid for (built in 2002), no credit cards, I have a true 30 and out pension plan that I can retire at age 54, a 401 k with NO company match (because we have a pension plan) that now I put 20% of my pay into. I also contribute to United Way and March of Dimes.
Wife, 5 kids, 6 fish and 1 dog. No health problems (a little over weight), works little to no overtime.
Its all about watching what we spend and what we need vs. what we want. I have found out that if we save our pennies a few weeks, we buy what we want. We dont watch movies in theaters, have very basic cable, we use store brands, shop at yard sales and Im not afraid to ask for a discount.
Now for the hypocritical part of my life, I work for a manufacturer that requires 99% of their sales to John Q. Public be financed.
When my home is paid for, I am going to help my mom get her home paid for. She has been paying on the same home for 49 years now because of all the refinancing over the years. Everytime she re-fi's, it starts her over again. She likes the lower payment, but now she's been paying on the same home for 49 years! 19 years longer than the original pay-off date!
Fordman
This is insane. How are you doing this on $60,000 a year??? If you don't mind me asking, how much did your house cost? I guess that is a huge factor in all of this but even still, 5 kids aren't cheap. Do you have any savings? Kids' college funds? I am super strict about spending but it is still hard to get ahead of things and we do pretty good with our combined jobs...
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depressing. I drive a 2008 bmw, my wife has 2006 bmw, we live in a gated community on a golf course in a house way too big for us. I have enough money and credit stashed away for a rainy day, we have equity in our home, I have a 401k, a 529 for my daughter, and we barely make over 100k a year. How can we have all of this? Through the smart use of leverage. For example, the cars are financed for as long as they will let me finance them out, why? because I am paying 1.9% interest. Why would I plunk down cash for our cars, that are depreciating every day, when I could instead put that money towards my daughters 529 that has returned around 9%? You don't pay cash for assets that depreciate in value, especially when you can finance them at a rate that is lower than inflation, its throwing away money.
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depressing. I drive a 2008 bmw, my wife has 2006 bmw, we live in a gated community on a golf course in a house way too big for us. I have enough money and credit stashed away for a rainy day, we have equity in our home, I have a 401k, a 529 for my daughter, and we barely make over 100k a year. How can we have all of this? Through the smart use of leverage. For example, the cars are financed for as long as they will let me finance them out, why? because I am paying 1.9% interest. Why would I plunk down cash for our cars, that are depreciating every day, when I could instead put that money towards my daughters 529 that has returned around 9%? You don't pay cash for assets that depreciate in value, especially when you can finance them at a rate that is lower than inflation, its throwing away money.
Where do you live? To me this makes all the difference in the world. I live in a 1,250 sqft. house with the wife and 2 kids (it's way too small) and we could easily sell it tomorrow for $600k-$650k. A good chunk of our money goes towards the mortgage - it's all relative to where you live, I think.
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This is insane. How are you doing this on $60,000 a year??? If you don't mind me asking, how much did your house cost? I guess that is a huge factor in all of this but even still, 5 kids aren't cheap. Do you have any savings? Kids' college funds? I am super strict about spending but it is still hard to get ahead of things and we do pretty good with our combined jobs...
We dont always buy new. We use coupons at the grocery and make a menu prior to shopping. My house (2250 sq ft in a rural area east of Cincinnati, OH) was $152,000 when we signed for it. We pay a 1/2 payment on our home every 14 days. The interest cycle is a 14 day cycle instead of a 30 day cycle. We dont eat out in restaurants except 2 times per month. We have a Christmas club account with a set dollar amount and when the money is gone, its gone, we dont spend another cent on Christmas. Our kids use alot of hand me downs. Play video games that are 2-3 years old and used.
We arnt cheapskates, we just want our home to be paid for so NO ONE can make us move if we dont make payments.
It has taken us alot of dicipline to achieve a debt free lifestyle. We pay cash so we know its ours.
When the house is paid for, we plan on doing alot of redecorating and doing alot of the things we have been putting off for the last 10 years. And we're gonna pay cash for it all!
Fordman
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depressing. I drive a 2008 bmw, my wife has 2006 bmw, we live in a gated community on a golf course in a house way too big for us. I have enough money and credit stashed away for a rainy day, we have equity in our home, I have a 401k, a 529 for my daughter, and we barely make over 100k a year. How can we have all of this? Through the smart use of leverage. For example, the cars are financed for as long as they will let me finance them out, why? because I am paying 1.9% interest. Why would I plunk down cash for our cars, that are depreciating every day, when I could instead put that money towards my daughters 529 that has returned around 9%? You don't pay cash for assets that depreciate in value, especially when you can finance them at a rate that is lower than inflation, its throwing away money.
See, I'm in the 'if you didn't buy it with cash, you don't own it' camp. There's absolutely no joy in borrowing money for a car to me. You turn X dollars into X/2 dollars in five years. Now THAT is depressing!
I paid $2500 for my car, and that makes me much happier than pretending to own a luxury car. For you, obviously pretending to own a luxury car makes you happier. Horses for courses. I won't criticise you. Give me the figures for your car finance. See which is cheaper. Who is able to put away more for investments, super annuation etc? You can't really say your way is the right way and that's that.
Reading Fordmans post rings true with me. And it reminds me that there is little pride nowadays in owning anything. I'm going to sound like Gramps, but when I was young, if you didn't have the money, you didn't buy the thing. You saved, and then you bought it, and it felt good to have WORKED to buy this object. Now everyone wants the instant gratification that credit gives. But buying stuff on credit is just not a very satisfying feeling for some people, like me and Fordman. The only thing that you might have to borrow money for is a house, which I have.
My house is paid off next year by the way. Bought at 200K, now pushing 600k. Took maybe ten years of not driving BMW's ;)
There is absolutely no way you would convince someone who is going to have paid off their house in the next year or so that no, it's better to let 'the man' keep owning it...
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student loans are low interest
Not necessarily. I had federal student loans, APR was close to 7%, so I payed them off in 3 years... saved myself over $50K in interest payments.
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This is insane. How are you doing this on $60,000 a year??? If you don't mind me asking, how much did your house cost? I guess that is a huge factor in all of this but even still, 5 kids aren't cheap. Do you have any savings? Kids' college funds? I am super strict about spending but it is still hard to get ahead of things and we do pretty good with our combined jobs...
We dont always buy new. We use coupons at the grocery and make a menu prior to shopping. My house (2250 sq ft in a rural area east of Cincinnati, OH) was $152,000 when we signed for it. We pay a 1/2 payment on our home every 14 days. The interest cycle is a 14 day cycle instead of a 30 day cycle. We dont eat out in restaurants except 2 times per month. We have a Christmas club account with a set dollar amount and when the money is gone, its gone, we dont spend another cent on Christmas. Our kids use alot of hand me downs. Play video games that are 2-3 years old and used.
We arnt cheapskates, we just want our home to be paid for so NO ONE can make us move if we dont make payments.
It has taken us alot of dicipline to achieve a debt free lifestyle. We pay cash so we know its ours.
When the house is paid for, we plan on doing alot of redecorating and doing alot of the things we have been putting off for the last 10 years. And we're gonna pay cash for it all!
Fordman
Ahhh, makes more sense now. $152,000 is crazy! I think I need to move to Cincinnati (although I don't think I could stand having to watch and read about the Bengals all the time - yuck). Unless I want to commute 2 hours to work each way moving really isn't an option. The real estate prices around me are out of control. Plus, the kids are in school and we don't want to uproot them and our entire family is on the east coast. I guess I just have to accept that life in and around NYC is ridiculously expensive.
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student loans are low interest
Not necessarily. I had federal student loans, APR was close to 7%, so I payed them off in 3 years... saved myself over $50K in interest payments.
Right, and what was the market rate on loans when you got 7%?
::)
Hell if I know, but I wouldn't call 7% low interest
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One nice thing about the recent changes for student loans is that the interest is now deductible for the first year or two. That's different than when I started paying for mine.
I think the bottom line is that everyone's situation is different accounting for income, family, housing, risk tolerance, long and short term goals, etc. What's good for some isn't the answer for others. That's why it helps to work with professionals to see the various options and strategies available.
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Hell if I know, but I wouldn't call 7% low interest
It's all relative. What year did you graduate? That'll put it in perspective.
For now, 7% sucks for paying interest but in the 70s and early 80's, that would be an incredible rate.
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Hell if I know, but I wouldn't call 7% low interest
It's all relative. What year did you graduate? That'll put it in perspective.
For now, 7% sucks for paying interest but in the 70s and early 80's, that would be an incredible rate.
2007
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2007
Damn kids.... ::)
;D
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2007
Damn kids.... ::)
;D
Hey, I'm 32... I was a late bloomer... (got tired of working in restaurants, so I decided to get my engineering degree)
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One thing I've found kind of interesting is a few of you have bragged about all your financial decisions and then say something like, "and going to pay for my kid's college, too." While that's nice and all, college is quickly turning into one of your worst possible investments and all these parents saving up all this money is doing nothing but driving tuition and fees up with all this artificial demand. Beyond that, student loans are low interest and your kid will have the rest of his life to pay it off. That $50k you saved up isn't going to be much help if he decides he wants to be a drama major and go to some fancy liberal arts college for a low paid career.
You aren't looking at it properly - college is not a financial investment. It is an investment in your kids' lives. No matter the cost, college is an experience I want my kids to have. It is out of control expensive though - only a select few will ever really earn it back. I'm guessing college will be between $250k-$300k PER KID by the time mine are ready to go.
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2007
Damn kids.... ::)
;D
Hey, I'm 32... I was a late bloomer... (got tired of working in restaurants, so I decided to get my engineering degree)
I'm just busting your balls. I graduated in 92 but have no idea what my interest rate was. I only borrow a couple of grand so I wasn't overly worked up about it.
My wife just finished her nursing degree last spring (2010) and I think she (yeah, right....WE) now have 20-25k in student loans to payback. Based on her salary, we'll cover the cost of that by the end of this year.
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Actually, Jim, I addressed all of that with my plan. I am not putting money away strictly for college. I'm putting it away to set up an income stream to pay for college loans. This way if the kids decide not to go to college I have a strong passive income for my own use. If they decide to study something useless I'm good. If they screw off college and waste the money I'm a lot less stuck resenting them because I didn't spend 15 years socking away cash just to write checks to the University. College loans are by far the lowest interest nonsecured loans you can get so why not use them? Any why not use a passive income stream to make the monthly payments? This way I'm using someone else's money to generate the income that I'm using to pay off a set of super low interest loans for education. Win/win and the contingencies are positive too so long as the original investment was sound.
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I for one am not setting up a college fund for my kid, if he wants to go to college, he has to work for it the same way I did, get scholarships, get grants, get loans. If the remaining difference to be paid is reasonable, I figure I could easily pay the rest out of pocket.
While he's still a young'un, I'm saving up most of his gift money from the grandparents and family and will be investing that for him over the years. That will be a "---steaming pile of meadow muffin--- Creek" fund in case he does something stupid and needs cash. I am not gonna tell him about the money so he expects nothing.
Am I cheap? Yeah...but I am incredibly self sufficient, and need to pass that ability on the hard way.
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There is something to be said for that. I paid for my 4+ years of college myself and my wife's 4 years of college too. It taught me a lot of things.
There is also something to be said for being able to start your own post college life without $100k in debt and ten years of payments crippling your finances. I am setting my kids up so hopefully they won't have to do that but am not going to give them the choice of any college they want. If they want my ride they're going to go to a good state college probably in our state so we're using in state rates. Anything over that will be loans they pay off themselves.
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$10 says they go off and get a degree in English.
;D
Their mother's main degree is in French. ;D That said it did become the base degree she built on to become a teacher.
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Chad needs to follow this two step plan:
1) Just let them play MK and then they'll become juvenile delinquents, and won't want to go to college, and you can use the savings to by more arcade games...
2) Profit!
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These days my kids are spending all their gaming time on the N64, the Vectrex, and the 2600. Clearly we spend a ton of money on cutting edge gaming tech. :laugh2:
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I think the best financial move is to leverage to the max and blow it all on cristal and hookers in Barbados.
This is the type of comment I read these kinds of threads for.
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Why pay cash when the banks are willing to pay you to use their card?
I use a rewards card to pay for practically everything, including all my monthly bills. Then I pay the balance off a month later (free loan from the bank behind the card) and every time I hit 5000 points I turn it in for a $50 credit on my statement.
It's not a lot of money (1-3% depending on where I use the card) but as long as they're willing to pay me I'll keep taking it.
I do the same thing (Charge on Discover and pay off by automatic bank payment), but paying cash is better.
The reason is that people who pay with credit cards tend to buy 15% more stuff than people who don't. Now, Dave Ramsey may have pulled that statistic out of his butt, but I believe it to be true.
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I do the same thing (Charge on Discover and pay off by automatic bank payment), but paying cash is better.
The reason is that people who pay with credit cards tend to buy 15% more stuff than people who don't. Now, Dave Ramsey may have pulled that statistic out of his butt, but I believe it to be true.
I believe he's right that average person spends more when paying by credit. I would argue that I'm nowhere near the average.
It helps to evaluate your spending on a monthly basis and categorize where the money is going, even if you don't set budgets. But you also need goals. If you don't have any plan for savings then any extra money at the end of a pay period looks like "free money" to a lot of people. I know plenty of people who will spend that money like it's going to expire, and they pay in cash.
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I know I'm sick of hearing about how tight money is from people who run up $150 bar tabs regularly and drive a car $20k more than they need.
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I do the same thing (Charge on Discover and pay off by automatic bank payment), but paying cash is better.
The reason is that people who pay with credit cards tend to buy 15% more stuff than people who don't. Now, Dave Ramsey may have pulled that statistic out of his butt, but I believe it to be true.
I believe he's right that average person spends more when paying by credit. I would argue that I'm nowhere near the average.
It helps to evaluate your spending on a monthly basis and categorize where the money is going, even if you don't set budgets. But you also need goals. If you don't have any plan for savings then any extra money at the end of a pay period looks like "free money" to a lot of people. I know plenty of people who will spend that money like it's going to expire, and they pay in cash.
Spot on. And you are always supposed to "pay yourself" first. Set a goal of how much you want to save on a monthly basis and put that much away so it's not spent on discretionary spending.
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Spot on. And you are always supposed to "pay yourself" first. Set a goal of how much you want to save on a monthly basis and put that much away so it's not spent on discretionary spending.
I put it away away. It's in a separate account at a separate bank in a fairly inconvenient location. No debit card. I'm not even sure where I put the checkbook. No way of transferring money out electronically. It's local, but the only way to get the cash in or out is to drive over during office hours, so I rarely make a withdrawal.
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Spot on. And you are always supposed to "pay yourself" first. Set a goal of how much you want to save on a monthly basis and put that much away so it's not spent on discretionary spending.
I put it away away. It's in a separate account at a separate bank in a fairly inconvenient location. No debit card. I'm not even sure where I put the checkbook. No way of transferring money out electronically. It's local, but the only way to get the cash in or out is to drive over during office hours, so I rarely make a withdrawal.
This thread is on the fringe of becoming a 12-step, self-help group.....
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I put it away away. It's in a separate account at a separate bank in a fairly inconvenient location.
You mean like the back of a volkswagon?