Living beyond your means

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Originally Posted By: Clubber_Lang
My 3 br ranch
property taxes are $725 a year. Its an average house.

We pay about $900 per MONTH! One of the reasons we are well on our way to get out of our house and this state...
 
Originally Posted By: Quattro Pete
Originally Posted By: Clubber_Lang
My 3 br ranch
property taxes are $725 a year. Its an average house.

We pay about $900 per MONTH! One of the reasons we are well on our way to get out of our house and this state...



Come to a state like SC, but please, please dont bring the same high tax philosophies
(not saying that you subscribe to them) here. Believe it or not many people move
away from a bad situation and bring it with them in that way. I'll leave it at that.
 
Originally Posted By: Clubber_Lang
Originally Posted By: 99Saturn
So be disciplined enough to make substantially higher than minimum payments monthly and pay your mortgage off in 5-7 years but don't trust yourself not to touch your investment in an index. I would hope those using this advice would pause to think about the implications if they can truly succeed in the former but not that latter and adjust their actions accordingly.
---
And I have no doubt it's worked for you, I just have no doubt other methods also work, and we differ on what's optimal.


If the market tanks, u lose your job and your house ac goes out, would u rather have
a paid off house or a fat mortgage pymt?

Would I rather have a paid off house or a fat mortgage payment? For me, that's a 2 dimensional question for a multidimensional issue, designed to only have one answer by the person asking it.

If I lost my job, I'd much rather have money in something more liquid than a home. Especially problematic for me if I've been maximizing my mortgage payments at the expense of saving for a bump in the road. Even more concerning if I was doing so and had yet to pay off the mortgage, being left with a pretty aggressively paid off house, some mortgage payments left to still make monthly, and a list of other expenses besides a mortgage, taxes among them.

Those are my only options? What did I do with the money I didn't use to pay off the mortgage? How many people own this house, is it just me? Do I have a spouse? Does my spouse also work? Is it a hardship paying for our monthly costs if I get laid off? What if my spouse gets laid off? What if we both do? Have we saved some number of month's expenses in a more liquid account? In a more risk adverse options? Do I have kids and their quality of life to worry about?

Oh and we don't have ac - sold the units that were left when we bought this house during the first heat spell and save some money on summer electric, and live with being a little uncomfortable when at home.
smile.gif
 
Originally Posted By: Clubber_Lang
I understand life circumstances and all. But with taxes that high consider moving
to a state that wont make you so blue with stratosphere taxes. My 3 br ranch
property taxes are $725 a year. Its an average house.

Originally Posted By: Jarlaxle
Originally Posted By: KenO
Originally Posted By: cashmoney
Because of WW2 my immigrant parents never made it past 5th grade in school. They were careful with their money, always saved a little for a rainy day, but never made enough to buy a house when I was a kid so we lived in rented apartments. My 82 yo mother final bought a small super cheap condo that she lives in about 20 years ago and paid it off in 10 years.

I was lucky enough to get a really good education, majoring in Economics and Finance, got a decent job out of school, saved my money like crazy for a down payment and bought my first starter house when I was 25 years old. I am currently on my 7th house (fully paid off). I learned early that doubling and tripling up on mortgage payments will quickly produce a paid off house. There are lots of fancy theories about how people should not pay off mortgage but instead put extra money into leveraged investments, etc. I say pure 100% horse-poop to that. Anyone that claims they can consistently make more than current mortgage interest rate on their personal investments is almost always lying or deceiving themselves. If they could consistently invest at that performance level they would be running a hedge fund for $5-10 mil a year.

Especially if you are a young person, please listen to this advice - Buy a house and some property you can afford as soon as you can and then save like crazy and pay it off in 5-7 years max. It is the greatest feeling in the world when you make that last payment and actually truly own something of value. Then and only then you can start leveraging, synergizing, etc on your way to being a big time investor.

Oh yea and never buy new cars, buy 3 year old nice low mile cars for cash and drive them for 10 years minimum. That is also the ticket to wealth.


At current home mortgage rates, this is horrible advice. My mortgage is at 3.5%. I've considered paying more money towards it, but I think I'd rather build my savings account for house #2, and turn this one into a rental property. Then rinse & repeat.


I just dumped my house and wish I'd done it sooner. It's at the point where the property taxes just aren't worth it. I'm in a nice apartment for not much more than what I'd been paying in taxes!


There are modest houses in developments around here that pay $20,000 a year in taxes ...
 
Originally Posted By: jcwit
Another reason for me not to move to N.Y.

Not that I wanted to anyway.


Just have to avoid the affluent suburbs that have experienced booms lately.

But, yes, property taxes are ridiculous out here.
 
Thats not just ridiculous its insane. I pay $725/year, good schools, good law enforcement, trash pickup ect.

NY taxes are leagalized robbery for ridiculous fat cat state pensions.
 
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Originally Posted By: Clubber_Lang
Thats not just ridiculous its insane. I pay $725/year, good schools, good law enforcement, trash pickup ect.

NY taxes are leagalized robbery for ridiculous fat cat state pensions.


Oh you can get houses here with that in taxes, too!

But they are probably condemned, have horrible city schools with lots of gang violence, and you have to wear bullet proof vests at all times ...
 
Originally Posted By: cashmoney
Originally Posted By: Jarlaxle
Originally Posted By: Panzerman
Dave Ramsey is a idiot. I listen long enough to scream and then turn the station. I love how he tells people to sell your car at a loss, then go buy a piece of junk and drive it. How about you keep the car you have, drive it past the point its paid for and every year you drive it after it paid for devides into the cost. I wont even get into his stupid logic about credit cards, all I can say is he is out of touch, use your debit card and when someone empties your accounts, see if you have thousands like Dave Ramsey, before you or the bank catches it and see how many checks bounce. use credit cards, much safer, much easier.


This is the myth that just refuses to die...my debit card and my credit card have exactly the same protections, period, end of discussion.




No they absolutely do not. A credit card has consumer protections built into it because of years of consumer protection regulations governing unsecured consumer signature debt instruments. A debit card is not a debt instrument and has almost no consumer protections built in by law - in fact it has significantly less protections for loss of funds, fraud, or basic implied warrant protections for product purchases madew with credit card. Try getting your money back from a bank if a relative finds your pin number in your desk and empties your account with your debit card. With a credit card as long as you report fraud within 60 days the most you can lose is $50.


No, you are not paying attention: I have done research. I have read the relevant documents. YOU ARE WRONG! (Actually, I have zero fraud liability!) If yours does not...you need a better bank!
 
Originally Posted By: cashmoney
Originally Posted By: Jarlaxle
Originally Posted By: KenO
Originally Posted By: cashmoney
Because of WW2 my immigrant parents never made it past 5th grade in school. They were careful with their money, always saved a little for a rainy day, but never made enough to buy a house when I was a kid so we lived in rented apartments. My 82 yo mother final bought a small super cheap condo that she lives in about 20 years ago and paid it off in 10 years.

I was lucky enough to get a really good education, majoring in Economics and Finance, got a decent job out of school, saved my money like crazy for a down payment and bought my first starter house when I was 25 years old. I am currently on my 7th house (fully paid off). I learned early that doubling and tripling up on mortgage payments will quickly produce a paid off house. There are lots of fancy theories about how people should not pay off mortgage but instead put extra money into leveraged investments, etc. I say pure 100% horse-poop to that. Anyone that claims they can consistently make more than current mortgage interest rate on their personal investments is almost always lying or deceiving themselves. If they could consistently invest at that performance level they would be running a hedge fund for $5-10 mil a year.

Especially if you are a young person, please listen to this advice - Buy a house and some property you can afford as soon as you can and then save like crazy and pay it off in 5-7 years max. It is the greatest feeling in the world when you make that last payment and actually truly own something of value. Then and only then you can start leveraging, synergizing, etc on your way to being a big time investor.

Oh yea and never buy new cars, buy 3 year old nice low mile cars for cash and drive them for 10 years minimum. That is also the ticket to wealth.


At current home mortgage rates, this is horrible advice. My mortgage is at 3.5%. I've considered paying more money towards it, but I think I'd rather build my savings account for house #2, and turn this one into a rental property. Then rinse & repeat.


I just dumped my house and wish I'd done it sooner. It's at the point where the property taxes just aren't worth it. I'm in a nice apartment for not much more than what I'd been paying in taxes!



There are definitely places in this country where property taxes are insane. But I'd relocate before I lived in an apartment. btw - if you think you aren't paying property taxes in an apartment you are deceiving yourself - its built right into your rent and reflects the value of the apartment. It has to work that way, the landlord is running a for profit business not a charity.


Yet again: I'm in a nice apartment for not much more than what I'd been paying in taxes!
 
Originally Posted By: Quattro Pete
Originally Posted By: Clubber_Lang
My 3 br ranch
property taxes are $725 a year. Its an average house.

We pay about $900 per MONTH! One of the reasons we are well on our way to get out of our house and this state...


My taxes quintupled in four years!
 
Originally Posted By: KenO

At current home mortgage rates, this is horrible advice. My mortgage is at 3.5%. I've considered paying more money towards it, but I think I'd rather build my savings account for house #2, and turn this one into a rental property. Then rinse & repeat.


Good plan...I do both...have my 401k account indexed to the S&P500 for the past 20 years. It will give me at least $500k at retirement. Plus I have a rental property investment that is on autopilot that I invested $170k in back in 1992 and it is now worth $665K. So in 11 years when I retire I should have at least $1MM and a paid off retirement home to live in.

Get one or two rentals going in highly desirable rental areas like Florida or the Carolinas. Make sure you have at least enough equity so that rent covers 125% of the cost to sustain the place. Then sit back and watch the mortgage balance decline. (let some other guy pay your mortgage off)

Then invest some money in the stock market so you are well diversified.

Keep it simple.
grin2.gif
 
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Doog - Very nice work sir - sounds like a very solid plan.

Good discussions here - I hope there are some younger folks here that read some of the various opinions and take it to heart.

As another poster stated there is no one perfect way to build security. And every plan has risk, every person has their own situation/complexity factors, and almost everyone will very likely make some mistakes along the way.

The critical requirement for financial security, way more important than relatively minor variations in detail, is to actually have a plan EARLY in life for achieving financial security. Then build the behaviors and discipline to execute on that plan month to month and year to year. For young people who aren't interested or savy in finance, the plan can be as simple as max your 401K contribution every year investing in 2-3 of the broadest possible market index funds. And ALSO make double payments on your mortgage (my personal favorite). Once you do that go ahead and waste the rest of your income on fun stuff like food, clothes, cars and medicine , etc. : )
 
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I have a pension, voluntary pension, 401K and an IRA.

I sleep well at night knowing some other people that are big time spenders with big egos struggle week to week with their cash flow situation.

I don't watch or listen to Dave Ramsey, but agree with 80% of what he preaches.
 
There's an opportunity cost in paying off your house. You are tying up hundreds of thousands of dollars into something that offers 0% return. That's not a savvy financial strategy. Mortgage rates are 3.5-4.5%. It's not that hard to beat that rate in other investments
 
I am perfectly fine paying $600/month for property taxes. It is a great filter that results in really low crime, excellent schools and mostly decent kids in the community.
 
Originally Posted By: rjundi
I am perfectly fine paying $600/month for property taxes. It is a great filter that results in really low crime, excellent schools and mostly decent kids in the community.



I'm not, I live in a small town, 3,500 pop., one of the best school districts in No. Indiana, crime? other than a drunk or 2 none. I apply for all exemptions available to me, my property taxes? "0" NONE, mayhap I live in a dump, nope just sensible Indiana. But it is an older home.

I see little need to keep up with any of the Joneses.
 
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Originally Posted By: rjundi
I am perfectly fine paying $600/month for property taxes. It is a great filter that results in really low crime, excellent schools and mostly decent kids in the community.



To each their own, i get that for 1/10th the cost. Im not a fan of giving all my $$ to
the gooberment. New England is a very scenic place however.
 
Originally Posted By: Quattro Pete
Originally Posted By: Clubber_Lang
My 3 br ranch
property taxes are $725 a year. Its an average house.

We pay about $900 per MONTH! One of the reasons we are well on our way to get out of our house and this state...



One of my coworkers has something like $1k/month in taxes. Ouch. I thought mine was bad at $3,600/yr, but I suspect it's on the low end in reality. OTOH we don't have sales nor income tax. So that helps a bit.
 
Originally Posted By: Doog
Originally Posted By: KenO

At current home mortgage rates, this is horrible advice. My mortgage is at 3.5%. I've considered paying more money towards it, but I think I'd rather build my savings account for house #2, and turn this one into a rental property. Then rinse & repeat.


Good plan...I do both...have my 401k account indexed to the S&P500 for the past 20 years. It will give me at least $500k at retirement. Plus I have a rental property investment that is on autopilot that I invested $170k in back in 1992 and it is now worth $665K. So in 11 years when I retire I should have at least $1MM and a paid off retirement home to live in.

Get one or two rentals going in highly desirable rental areas like Florida or the Carolinas. Make sure you have at least enough equity so that rent covers 125% of the cost to sustain the place. Then sit back and watch the mortgage balance decline. (let some other guy pay your mortgage off)

Then invest some money in the stock market so you are well diversified.

Keep it simple.
grin2.gif



Is $1M enough to retire on? I've heard others state that too, seems like for some it's the magic number. I've got a longer ways to go (not quite 38 yet) but I've assumed a min of $2M required--and that's assuming SS stays adjusted to inflation. Much more if I can't depend upon SS.

So hard to predict future inflation, perhaps I'm being too pessimistic in my planning. Future cost of things is impossible to guess.

*

I've thought a few times of getting into the rental game, but have always feared the what-if's. Buy the property and then the roof springs a leak... There goes many months of potential income, as I'm not going to reshingle it. Well, I guess it wouldn't be so bad if I could buy it outright, but if I could... I'd rather have it in an index fund methinks.
 
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