The post whore thread.

[Great-Kazoo]

Whenever I need to leave it all behind
Or feel the need to get away
I find a quiet place, far from the human race
Out in the country

[Great-Kazoo]

So you like rockets?

Show us where you adjuster touched you.

[KS63]

Show us where you adjuster touched you.

Hey! Hey! Hey, now!......

[Irving]

So you like rockets?

I like fish sticks.

[HoneyBadger]

Do you like mortgages?

You asking me?

If not, then don't read the rest of this post... Disclaimer: This may be a bit incoherent. I just woke up.

1. "The borrower is slave to the lender" - This is not just an old axiom, it is very real. If I have a huge debt load and can't pay, the bank (or the IRS, etc) will take my house, my car, etc. When you owe money (or anything really) to someone else, they can have a lot of control in your life. Most Americans have gotten very comfortable with this (look at the student debt situation - it's been so normalized to graduate college with $50k+ in student debt, which many graduates take a very long time to pay off) and at the end of the day, the banks own them. This is why getting out of debt is called "financial freedom".

2. I think real estate is a good investment if you choose wisely and don't bite off more than you can chew. I think borrowing money is generally bad, especially if it is over a long period of time.

3. The first rule of investing (okay, maybe not the first, but it's an important one) is to take advantage compound interest. Taking 30 years to pay off your house is letting the BANK take advantage of YOU through compound interest. Just find a mortgage calculator and play with some numbers.

3a. Scenario #1: If I borrow 300k at 3.5% interest and take 30 years to pay it off, I would end up paying $484,968 over those 30 years. I think of it like paying a $184,968 tax to buy something that I probably couldn't afford in the first place.
3b. Scenario #2: If I borrow 300k at 3.5% interest and take 15 years to pay it off, I would end up paying $386,037 over those 15 years. Now I am only paying a $86,037 tax.
3c. Scenario #3: If I borrow 300k at 3.5% interest and take 7 years to pay it off, I would end up paying $338,684 over those 7 years. Now I am only paying a $38,684 tax.
3d. Scenario #4: If I buy a house with cash, I pay the face value and have more money to invest in other areas.

3e. Final note on compound interest: Anyone here who has a 30yr mortgage knows the pain in seeing the payments for the first 10 years be more interest than principle. 3.5% is a pretty dang good interest rate. If 5.5% is the best rate you can get, you're going to pay more on interest than on the actual house over 30 years. That's straight up depressing.

4. The main reason I'm okay with a mortgage (as long as it is a good rate and 15yr or less mortgage, combined with a wisely picked house) is because houses generally go up in value over time, unlike most other things that people borrow money for (cars, boats, consumer goods, etc)

[HoneyBadger]

I like fish sticks.

Is that code for something? Sounds ...fishy...

[Irving]

You asking me?

If not, then don't read the rest of this post... Disclaimer: This may be a bit incoherent. I just woke up.

1. "The borrower is slave to the lender" - This is not just an old axiom, it is very real. If I have a huge debt load and can't pay, the bank (or the IRS, etc) will take my house, my car, etc. When you owe money (or anything really) to someone else, they can have a lot of control in your life. Most Americans have gotten very comfortable with this (look at the student debt situation - it's been so normalized to graduate college with $50k+ in student debt, which many graduates take a very long time to pay off) and at the end of the day, the banks own them. This is why getting out of debt is called "financial freedom".

2. I think real estate is a good investment if you choose wisely and don't bite off more than you can chew. I think borrowing money is generally bad, especially if it is over a long period of time.

3. The first rule of investing (okay, maybe not the first, but it's an important one) is to take advantage compound interest. Taking 30 years to pay off your house is letting the BANK take advantage of YOU through compound interest. Just find a mortgage calculator and play with some numbers.

3a. Scenario #1: If I borrow 300k at 3.5% interest and take 30 years to pay it off, I would end up paying $484,968 over those 30 years. I think of it like paying a $184,968 tax to buy something that I probably couldn't afford in the first place.
3b. Scenario #2: If I borrow 300k at 3.5% interest and take 15 years to pay it off, I would end up paying $386,037 over those 15 years. Now I am only paying a $86,037 tax.
3c. Scenario #3: If I borrow 300k at 3.5% interest and take 7 years to pay it off, I would end up paying $338,684 over those 7 years. Now I am only paying a $38,684 tax.
3d. Scenario #4: If I buy a house with cash, I pay the face value and have more money to invest in other areas.

3e. Final note on compound interest: Anyone here who has a 30yr mortgage knows the pain in seeing the payments for the first 10 years be more interest than principle. 3.5% is a pretty dang good interest rate. If 5.5% is the best rate you can get, you're going to pay more on interest than on the actual house over 30 years. That's straight up depressing.

4. The main reason I'm okay with a mortgage (as long as it is a good rate and 15yr or less mortgage, combined with a wisely picked house) is because houses generally go up in value over time, unlike most other things that people borrow money for (cars, boats, consumer goods, etc)

Hold the phone bub.
3d. If you buy a $300,000 house with cash, you now do NOT have more money to put towards investments, because you just dumped it all into a house. You may have more monthly, but not overall.
Let's say you've got $300,000 cash for a house, you could put $60,000 (20%) down on a 30 year note, then use the remaining $240,000 to put 20% down ($30,000) on EIGHT $150,000 rental homes (or a small multiplex). With smart purchasing, each rental will pay its own mortgage and then some, which will go toward paying the mortgage on your main residence, if not all of it. This leaves you with 9 potentially appreciating properties, with 8 of them cash flowing. If your mortgage is 100% paid for by the rentals, then you are in the same situation as 3d, but with many more assets (potentially).

Of course that scenario is pretty fluid and can be argued in a hundred different ways.

Personally, if I had $300,000 cash, I'd consider putting $100,000 down on a $300,000 house on a 30 year note, and just paying it off as fast as possible. This gives me some room to slash my budget indefinitely if something comes up and I need to knock my usually high mortgage payments down to the minimum while I sort out what ever financial issue I'm having. I'd also still have $200,000 to invest in other properties of the market or whatever. That's the way I treat my 30 year mortgage. The minimum payment is something like $870ish, but I've been paying $1,300ish a month since I've had the mortgage. This drop the interest amount faster, has turned my 30 year mortgage into an 18ish year mortgage (assuming I continue paying at that rate), helps me build equity faster, and finally, if I run into emergency expenses or job loss, I can magic an additional $430 out of my monthly budget without any negative effects on my credit or acquiring more debt. This is what I actually did in the (it's been 6 weeks now) time I've gone without a paycheck. So far, I've only paid a single mortgage payment at near the minimum required, so I won't have to kick in that much extra to catch me back up to where I was so I don't lose any ground on my plan to pay off way early.




































Now, having read all of that, watch this short video.

[HoneyBadger]

Hold the phone bub.
3d. If you buy a $300,000 house with cash, you now do NOT have more money to put towards investments, because you just dumped it all into a house. You may have more monthly, but not overall.
Let's say you've got $300,000 cash for a house, you could put $60,000 (20%) down on a 30 year note, then use the remaining $240,000 to put 20% down ($30,000) on EIGHT $150,000 rental homes (or a small multiplex). With smart purchasing, each rental will pay its own mortgage and then some, which will go toward paying the mortgage on your main residence, if not all of it. This leaves you with 9 potentially appreciating properties, with 8 of them cash flowing. If your mortgage is 100% paid for by the rentals, then you are in the same situation as 3d, but with many more assets (potentially).

Correct. More per month to invest, but if you are investing money instead of paying off your debt with that same money, you have to subtract the money you are paying in interest from your gains. (If you are making 7% with the money you invest, while losing 3.5% on your house "investment", your net is only 3.5%. 3.5% gain is barely (if even) keeping up with inflation. The biggest thing that you left out of your equation above is RISK. There is an incredible amount of risk in being a million of dollars in debt on 8 different properties. Cash flow is not guaranteed. What if the market slumps and 3 of your rentals are vacant? Can you cash flow that for 2 or 3 or 6 months? What about damage from renters? Are you making enough to pay the mortgage+insurance+taxes AND cover repairs and maintenance? Also, no bank in their right mind would loan you the money to buy 8 rental houses at $150k ea without having an established income (with a track record of more than 24 months) to cover the mortgage+insurance+taxes on each of them. Those payments would each be somewhere around $700/mo, so you would need to have an established income of around 8k/mo before a bank would even think about loaning you that money.

Of course that scenario is pretty fluid and can be argued in a hundred different ways. Yes. I also could be totally crazy. There have been numerous studies that show many similarities between sleep deprivation and alcohol intoxication. My body doesn't handle night shifts very well.

Personally, if I had $300,000 cash, I'd consider putting $100,000 down on a $300,000 house on a 30 year note, and just paying it off as fast as possible. Interest rates on a 15yr note are a bit lower, but if you pay it off in less than 10 years, the difference between 2.8% and 3.35% isn't much. This gives me some room to slash my budget indefinitely if something comes up and I need to knock my usually high mortgage payments down to the minimum while I sort out what ever financial issue I'm having. I'd also still have $200,000 to invest in other properties of the market or whatever. That's the way I treat my 30 year mortgage. The minimum payment is something like $870ish, but I've been paying $1,300ish a month since I've had the mortgage. This drop the interest amount faster, has turned my 30 year mortgage into an 18ish year mortgage (assuming I continue paying at that rate), helps me build equity faster, and finally, if I run into emergency expenses or job loss, I can magic an additional $430 out of my monthly budget without any negative effects on my credit or acquiring more debt. This is what I actually did in the (it's been 6 weeks now) time I've gone without a paycheck. So far, I've only paid a single mortgage payment at near the minimum required, so I won't have to kick in that much extra to catch me back up to where I was so I don't lose any ground on my plan to pay off way early. You did a good job planning for the future here. Children do things on impulse, adults make thoughtful decisions based on the long term effects. The most important thing I think you said here was about "paying it off as fast as possible". Too many people fall into the "making payments" trap and then never get out of debt and never seriously plan for their own wealth. Just having this discussion shows that we are way ahead of the average American.

I don't think I'm saying coherent things right now. Sorry if none of that makes sense.

[HoneyBadger]

...Test post for the weird glitch I found...

[fly boy]

omg