I have given up... We can't do it...

[slip knot]

My wife and I got into rental property after we got burned in 08 stock market fiasco. 5 properties have been purchased and paid off with one left to pay out. We are finding that being out of debt has its disadvantages. IRS wants their cut of the profits and without debt the profits are higher. So Uncle Sams cut is higher.

On our leasee's we run a background and credit check. It's astounding how many people are carrying an enormous load of revolving credit. The last two we ran both had over $15K in credit card debt but they were making the payments!!! They will never pay that amount of debt off. Its kinda scary. It's also why rentals are working for us, because some people will never be able to buy a house.

 

[Autorotica]

Always interesting to hear everyone's thoughts... and assumptions.

I should have mentioned not doing well saving outside of putting a little something away for retirement. That we do...

If you want to ask questions, fire away...
Chris

 

[Car_Guy]

My wife and I got into rental property after we got burned in 08 stock market fiasco. 5 properties have been purchased and paid off with one left to pay out. We are finding that being out of debt has its disadvantages. IRS wants their cut of the profits and without debt the profits are higher. So Uncle Sams cut is higher.

I hate this excuse, people would rather pay a bank X in interest to get a small fraction (X times your tax rate) back at tax time....

 

[Trucky]

You sure you didn't leave certain details out in order to get the kind of response you were expecting (hoping for)? The minute I read your post I could have told you half of these replies.

Your post screams "I really don't have many problems but I think I do". That's just being honest.

And many around here, myself included, would love to have your "problems". Apparently we're missing something.

 

[NUTTSGT]

Normally I don't see a problem with borrowing against your house (if it is the last home you will own and live there the rest of your life) to build a garage or do a remodel but not for toys. I believe you and the wife need to start some financial work, create a budget to get some money in the bank and stick to it before you do anything.

 

[hosz]

If I had to choose between a nice car and a nice bank account, I would pick the nice bank account every time.

The first and only car I ever got was when I started working 20 years ago. It cost $17,500 and now has over 200k miles. It still works so I never bought another one. Came close to buying a new one a couple times but imagined what my bank account would look like if I did.

I never bought a house and the money I would have used for a down payment went into the stock market. I now have about 4 years of living expenses saved up plus my 401k.

Personally, I find it comforting knowing that I can tell my boss to go f*ck himself and still be able to put food on the table.

 

[Autorotica]

You sure you didn't leave certain details out in order to get the kind of response you were expecting (hoping for)? The minute I read your post I could have told you half of these replies.

Your post screams "I really don't have many problems but I think I do". That's just being honest.

And many around here, myself included, would love to have your "problems". Apparently we're missing something.

Trucky,

My intent wasn't to accomplish any of the situations that you suggest.

There is more than 1 way to skin a cat. There are some instances in which debt isn't all bad.

I don't have a single problem that I am looking for someone else to solve. I have situations that I like hearing other peoples insight to help me decide what is best for me.

I am damn proud of ALL that I have... It surely didn't come to be without me making sacrifices and busting my ***.

Chris

 

[NUTTSGT]

If I had to choose between a nice car and a nice bank account, I would pick the nice bank account every time.

The first and only car I ever got was when I started working 20 years ago. It cost $17,500 and now has over 200k miles. It still works so I never bought another one. Came close to buying a new one a couple times but imagined what my bank account would look like if I did.

I never bought a house and the money I would have used for a down payment went into the stock market. I now have about 4 years of living expenses saved up plus my 401k.

Personally, I find it comforting knowing that I can tell my boss to go f*ck himself and still be able to put food on the table.

If you never bought a house, you must be paying rent ? Did you ever consider how much you have spent on rent over the years and have nothing to show for it ?

 

[MackMan]

For those that think that auto interest rates are low, it is just built into the price you're paying. Go in with a wad of cash and see how much the price goes down.

I hear this a lot, but in my experience that's not true. I've not experienced a dealer that finances with their own $, so it makes no difference to them if the $ is a big fat check from your checking account, or a check from the bank. I have financed through a dealer twice, simply because it was easier to do that than figure out how to move $ around etc on short notice. Let the dealer find the money for me, then I pay off at my convenience.

First car I bought on credit, I signed a contract to buy the car, paid $0 to the dealer that night, with the agreement that we would sort out the details later. Their finance manager would shop a deal, and I would do my own homework and decide what was best. With a finance rate of 3.75% when I can invest at 5-10%, why outlay my own $ up front?

For me I have always been able to invest with at least 5%, so if I can borrow for less than that, then I come out ahead.

 

[Autorotica]

Concrete cost what per yard 20 years ago? How about today? That was what I meant in the original post concerning inflation... I didn't mean to imply what the "government" stated inflation rate is. I meant to imply the REALITY rate.

There is zero inflation... except for everything I want to buy costs more or is being packaged smaller quantities at the same price.

Chris

 

[nicksnothereman]

At 46 years of age, I have resigned myself to the idea that WE lack the ability to put aside money at a rate that exceeds inflation. Its cheaper for me to pay the interest and to have it now than it would be to wait... and do it with cash.

Despite having paid our home off 10+ years ago, we seem to make almost no headway saving money. We bought a $40,000 Tahoe in 2007 and paid it off in 362 days, but haven't been able to accumulate a similar amount in a savings account in the last 7 years since.

I cant keep fighting this fight. I have succumbed...

Given the super low cost of money last year, We pulled a cash out REfi for less than 80% of our home's value. Projects include redoing the kitchen, building a deck, buying a toy or 3 and with what is left over building the shell of a Shed that will end up having to wait until additional monies comes available to finish.

Ever find yourself here?
Chris

Inflation is (kind) of a myth unless you're dealing with international sellers all the time. Cue the rabble rabble squad, but prices at retail are arbitrary. They don't just jack up everything to match inflation even if the cost of making a finished good is too high. At the same time anything made of 100% american components should never be affected by inflation; cost of distribution might go up (gas) but the price should stay relatively the same even if the cost of labor goes up (which as many know hasn't really happened).

If I had to "judge" you (which I do not regularly do) I'd say that either your savings is fine or (if you're not happy) you need to cut back to a degree. You said tahoe so you got hit with a couple things: price of vehicle, price of maintenance for a heavy vehicle (wear/tear), and gas. Maybe you made the wrong choice on that particular model. But it is not my place to judge.

About the other stuff...did you just say you used the house you owned outright to get cash? That sounds like a bad idea given the state of things economically.

 

[MackMan]

the trick is to make enough in actual wages that investing in anything other than overtime is not part of the plan.

investing is gambling. gambling is not a good part of the plan.

I have no investment or plan that isn't fdic.


401k selling point;
"youll be in a lower tax bracket when you retire"

so...they believe you'll fail at life...and that's the big selling point?

Actually, the 401K seling point is that my employer puts in $0.75 for every $1 I put in. I max out that amount, but any $ for me is IRA which is based on today's tax bracket.

I put about $3,000 in a stock account when I was about 15, and at 28 I've used that $3,000 to fund house upgrades, buy "toys" etc along the way and still have $5,000 in that account.

Sure there's a risk to investment, but it's a calculated risk.

Also still have the luxury of a partial "defined benefit" retirement plan, something that's all but extinct these days.

 

[Autorotica]

Inflation is (kind) of a myth unless you're dealing with international sellers all the time. Cue the rabble rabble squad, but prices at retail are arbitrary. They don't just jack up everything to match inflation even if the cost of making a finished good is too high. At the same time anything made of 100% american components should never be affected by inflation; cost of distribution might go up (gas) but the price should stay relatively the same even if the cost of labor goes up (which as many know hasn't really happened).

So how does one explain the 17 separate price increases in the cost of concrete that every contractor and concrete plant were quoting in 2008?

You said tahoe so you got hit with a couple things: price of vehicle, price of maintenance for a heavy vehicle (wear/tear), and gas.

Said heavy 2007 vehicle now has 50K miles on it. I am thinking that isn't the case given our rate of usage.

About the other stuff...did you just say you used the house you owned outright to get cash? That sounds like a bad idea given the state of things economically.

Yup, exactly what I did. Why is that a bad thing?....

Chris

 

[Trucky]

Trucky,

My intent wasn't to accomplish any of the situations that you suggest.

There is more than 1 way to skin a cat. There are some instances in which debt isn't all bad.

I don't have a single problem that I am looking for someone else to solve. I have situations that I like hearing other peoples insight to help me decide what is best for me.

I am damn proud of ALL that I have... It surely didn't come to be without me making sacrifices and busting my ***.

Chris

Fair enough. I know many who would love to have a vehicle paid off, let alone a house. You should really try to get an "outside" view on your finances and your lifestyle. It might show a little insight that you might be skewed away from (being used to the situation thus far).

No one said you inherited it, myself included. Hard work is rewarding. And it gives you something that hopefully isn't just booze and hookers. In your case, that was a nice truck, a house, and a good situation for your family, to put it in a really simple light. And I think a little more thought would have been nice before you took that cash out of your estate (if I'm using the term properly). I'm working on about 80$ a week spare, so I won't know your situation for years at least, so don't take my advice too literally. I haven't been around the block for long.

All the best,

M.

 

[e-tek]

I've begun calling these the HOLIER THAN THOU threads. An OP brings up a subject, fires out a few personal 'facts' and BAM - everyone is off to the races calling him out for not doing it the right way - which is generally either their way, or Dave Ramseys' way!

This is one of the most HOLIER THAN THOU threads I've ever read!

 

[hosz]

If you never bought a house, you must be paying rent ? Did you ever consider how much you have spent on rent over the years and have nothing to show for it ?

The sole reason I could save as much as I did was because I did not buy a home. Instead of using the money for a down payment on a home, I continued to invest it.

Now, my investments/savings are generating about $10k a year. I don't consider having an extra $10k a year "nothing."

 

[Moose97]

I've got no problem with someone buying a $40K vehicle if he can pay it off in a year and is still driving it 7 years later. You paid your house off 10 years ago? Before you turned 36? That's amazing! What I can't figure out is why all of a sudden you can't save money? If you can save $40K in a year that will go a long way on your remodel. Another year and another $40K and you've got some new toys. I don't get it but hey, it's your life. I just think you've already proven that when you set your mind to saving money you can do it!

 

[lat905]

no homeowner wants to face the reality that his $2500 per month house rents for $1200...with no repair costs.

Yeah, that one hurts......

After what the value of my home did in 2008-2009, I kind of wish I had been renting.

 

[Trucky]

thanks for saying that.

I'm on the "bite my tongue" program, but some of you take so long to come to the rescue.

Didn't you get torched for similar things on a thread not too long ago?

The problem here was lack of detail in the OP's post. People are naturally going to assume things and react.. so why even give them that chance? Anyone can post here. Getting offended because people don't like folks who don't have to worry about money is ridiculous. For most, that's the problem. I don't like judging folks too harshly, but no one would do it if it never turned out somewhat correct, right?

I doubt you'd find many places that wouldn't react the same way.

Edit: And I see myself stumble again after reading the reply below this very one. Hah. That's life. Thanks for the considerate thoughts. I can't wait to be old myself (Just kidding, amigo!)

 

[Autorotica]

No one said you inherited it, myself included. Hard work is rewarding. And it gives you something that hopefully isn't just booze and hookers. In your case, that was a nice truck, a house, and a good situation for your family, to put it in a really simple light. And I think a little more thought would have been nice before you took that cash out of your estate (if I'm using the term properly). I'm working on about 80$ a week spare, so I won't know your situation for years at least, so don't take my advice too literally. I haven't been around the block for long.

All the best,

M.

What a compliment Trucky....

Im an old guy. You don't know it yet but you WILL be in my situation sooner than you think...

I have been divorced twice.
I have made wrong decisions...
Ive given away more furniture according to my grandmother than anyone she knows.
I refuse to succumb to the negativity. Keep paddling

You will come out on top. One day the switch will flip and you will have learned how to slay those dragons and be on top.

I cant wait for you to find it...
Chris

 

[hosz]

no homeowner wants to face the reality that his $2500 per month house rents for $1200...with no repair costs.

LOL. This is exactly why I did not buy. And you forgot property taxes, insurance, and HOA fees.

 

[Bull]

I've begun calling these the HOLIER THAN THOU threads. An OP brings up a subject, fires out a few personal 'facts' and BAM - everyone is off to the races calling him out for not doing it the right way - which is generally either their way, or Dave Ramseys' way!

This is one of the most HOLIER THAN THOU threads I've ever read!

I agreed with you the last time I saw you say something like this, and I'm doing it again.

 

[6768rogues]

Self control.
10 years ago I took a new job that gave me a substantially higher salary. It was enough that we could have sold our paid off house and bought a new one and two new cars to go with it, along with upgrading our vacations. Instead I saved the entire difference in salary and it was what I needed to retire 4 years earlier than planned.
If you don't have the discipline to save money, live the way you live and work to pay it off. Nothing wrong with that, just a different path from what I took.

 

[Lhorn]

I've begun calling these the HOLIER THAN THOU threads./QUOTE]

I agree but to be fair, the OP worded his post in a way that all but invited people (at least internet scholars) to make assumptions and yes, get preachy. To the OP's credit, he's not gotten a bit bent out of shape at the "holier than thou" types. No harm, no foul. Seems like more an exercise in debate and "wind it up and see where it goes" than really a request for advice.

 

[hosz]

Yup, exactly what I did. Why is that a bad thing?....

Refis are usually used to get a better interest rate, not to re-mortgage a home. Cash out refis were one of the reasons for the housing bust in 2008.

Cash out refis were fine as long as home prices kept appreciating, but once home prices started declining, the people who took out the cash out refis found they owed more on their homes than they were worth.

Suppose you took out a $200k loan, but your house is now only worth $150k because of the market. If you need to sell your home for whatever reason, you will need to come up with $50k to repay the bank or you can't sell your home.

Many people did not have an extra $50k just lying around and chose to simply abandon their home. This led to housing prices falling even further, more people going underwater, and as more people fell under, home prices would fall further and put more people underwater. The fear was it would cause a never ending cycle of mortgage defaults. It was a very scary time.

Thankfully, the cycle was broken, at least temporarily, by the Fed pumping a couple trillion dollars into the economy and in the process, devaluing the U.S. dollar to the equivalent of Canadian currency.

 

[Architorture]

no homeowner wants to face the reality that his $2500 per month house rents for $1200...with no repair costs.

Except when the guy who owns the house pays a $500 mortgage for your $1200 rent

 

[drmarkr]

Very interesting........all of you folks read through the "Are You Happy?" thread, I presume?

"Those who have money, spend it like they don't. Those that don't, spend it like they do."

You drive a $40,000 Chevy. I drive a $4,000 2001 Chevy Silverado. Holier than thou? No. Just offering some evidence that my quote is likely valid....

 

[Architorture]

The point is that renting obviously isn't always the best proposition just as owning may not either. I can honestly say I am way better off owning all of the properties that I have other people renting from me. I'm playing with other people's money...the difference is I know them by name and they hand me a check each month.

 

[Architorture]

Like your excessive punctuation?

You are equating income with value... That is rarely the case with a single family home.

 

[Architorture]

Way.to.edit.your.post.after.the.fact.

Unless of course all the extra periods were not intended for emphasis.

Which I'm fairly certain they were.

 

[hosz]

The point is that renting obviously isn't always the best proposition just as owning may not either. I can honestly say I am way better off owning all of the properties that I have other people renting from me. I'm playing with other people's money...the difference is I know them by name and they hand me a check each month.

For my situation, I pay $2500/mth rent. I looked at buying in 2009/10, but even at the market bottom, buying a place with the same location/square feet would run about $3800/mth in mortgage and taxes. Housing prices have recovered a bit in my area and a similar place now runs about $4200/mth.

It's a no brainer when renting is 30% cheaper than buying, exclusive of maintenance and insurance.

Of course buying investment property is different than residential purchases. I used to rent homes/apartments but gave up because I got sick of the calls at 3 a.m. from drunk tenants who locked themselves out, break **** then expect you to drop everything to fix it, complain because a light bulb is out, never enjoying a vacation because some idiot tenant would always call to ruin it, etc.,

 

[pepi]

no homeowner wants to face the reality that his $2500 per month house rents for $1200...with no repair costs.

First your 2500 per month figure is not a given, the more you put down the lower that figure gets. So it is very easy to beat the 1200 a month rent, second you rent you leave, you have nothing.

Another and not sure how much longer the mortgaged home owners have, but for now the loan interest is a write off. Someone was touting the fact that he as a renter did not have to pay property taxes another write off.

HOA fees .......... News flash! Do not buy a home with a Gestapo that you pay to tell you how to live. Repairs well everything breaks, if you own the repairs will be done quickly, and at the cost of materials. You control everything and make them the way you want them. Do not need to wait on some goof to put a bandaid on the problem

So no way in Hell is renting better, only for the slumlord he loves the renter.

The only thing I could offer the OP is to not borrow money on your paid off home. It is a great feeling to live in a home that you own. Think of it as savings, IRA or whatever try to leave the lack of that debt alone, paid off it is an asset. Your home when compared to a savings account gives a better return on your $$$$

 

[dsimatt]

First your 2500 per month figure is not a given, the more you put down the lower that figure gets. So it is very easy to beat the 1200 a month rent, second you rent you leave, you have nothing.

Another and not sure how much longer the mortgaged home owners have, but for now the loan interest is a write off. Someone was touting the fact that he as a renter did not have to pay property taxes another write off.

The whole writing off interest is nice and doubled my tax return but what i got back was within a few hundred of what i paid in property taxes. The last year i was renting i paid 7200 in rent all year, my loan interest and taxes equal over 6 grand so was only throwing away 100 bucks a month renting.

I think that owning a house is nice and in the long run you'll have something to show hopefully but renting also has its own plusses and the main for me was i could safe money without all the extra expenses that home ownership brings.

In the end i'm just a poor man in a rich mans world.

 

[TheGunCollector]

$40,000 vehicle is relative.

That might be a months wages to him and op was acting conservatively.

Too little info to make all these assumptions.

Some of you seem happy in that single wide, some not happy in the mcmansion.

It's percentage of income. It always is.

The issue is the OP mentioned in his post that he uses credit to any purchase non essential items while not being able to save $40K in 7 years.

Unless I'm reading into it too simplistically and the OP is trolling us.

...Or, he could be like me. I choose to risk my savings in real estate investments rather than the stock market and/or cash savings. I have cash saved - but the bulk of my "savings" is income producing commercial real estate.

It is possible I guess the OP is in a similar situation, and worded his OP vaguely enough to elicit incorrect assumptions based upon the lack of info.

I'll modify my first response from he made some poor financial decisions to - Need more info.

 

[Koken]

Dismatt,

Paying rent is spending money no matter how you look at it (money that you can never recover), not saving it. Paying mortgage payments, on a house that you can afford (key word: afford), is investing (you get something back). Home ownership is investing in your family's future, and provides security and stability (especially important to children). It allows you to take advantage of available tax deductions and tax credits, that will lower your taxable income.

Home ownership allows you to obtain a reverse mortgage late in life if you fall on hard times and need the money to live on.

Home ownership also allows you to leave something to your children when you die.

We are born a baby and die a baby. Meaning you will require care when you are born and again leading up to your death. Running on empty will only get you so far. Saving for your future will prevent you from living in some low-income assisted living facility in dirty diapers.

The rich rent because they are able to write off a portion or all of the costs, due to their businesses or what have you. The rich/business owners also borrow money to leverage investments and in capital assets/projects. Leave the borrowing of money to them.

And most importantly, stop comparing yourself to the rich. Opportunity exists to everyone. Make a plan and stick to it.

 

[5mall5nail5]

I have a funny question if your house mortgage is $2500 and you could rent it for $1200 what high-school didn't you go to? Lol

Sent from my SCH-I535 using Tapatalk

 

[Dragster Racer]

Sometimes when you find yourself in a hole, the best thing to do it put down the shovel.
As far as the truck thing: What are the payments going to be on a truck? Start putting that away and a little more, and in a few years, buy the truck with a little bitty loan. If you cannot save money, then $40k to 50k trucks are not your answer.

 

[TheGunCollector]

http://phoenixflippers.blogspot.com/2014/01/maricopa-part-1_18.html?m=1

Here's how life and investment and strategies and rent versus mortgage all come together.

I certainly know without a doubt this is no one here, that we are all gainfully employed, or happily on disability, or retired and financial shortcomings never come in to play....

As the touted king of highhorse on this site I fear those who voted such may indeed have been incorrect.
I can't hold a candle to LOTS of you.
I am but a comparative piker....

Meh - those houses are still asking about $100 sq/ft - more or less. Too high.

 

[dsimatt]

Dismatt,

Paying rent is spending money no matter how you look at it (money that you can never recover), not saving it. Paying mortgage payments, on a house that you can afford (key word: afford), is investing (you get something back). Home ownership is investing in your family's future, and provides security and stability (especially important to children). It allows you to take advantage of available tax deductions and tax credits, that will lower your taxable income.


And most importantly, stop comparing yourself to the rich. Opportunity exists to everyone. Make a plan and stick to it.

I agree with what you say thats why i have my house but renting is not a complete waste of money its more of a service than a purchase because you need to live somewhere.

I've owned my place for 2 years and i bought in pretty low on market price and within my budget but with everything happening lately its hard to put money away were when renting it was easy as heck. My goal is get to get this place paid offearly hopefully and i'd like to move into the country or someplace with more land and only spend maybe 50k more than what i get selling this place to have a small manageable mortgage.

 

[bams50]

I love you guys that buy NEW vehicles . You pay $40k and I buy it from you in 4 years for $15K. It wont smell like new leather after my Jack Russell farts in it any way .
I think you will find that most folks that can afford to buy new , with cash , Don't. That is one reason they can.

I will also tell you that most people that retire before the age of 60 are debt free.

This is brilliant. And, dead on.

80% of millionaires today are FIRST generation rich. That means they started with nothing and earned what they have.

If you want to be rich, stop the carping and assumptions and class warfare, and start watching what rich people do- and copy it. (See above).

We are born a baby and die a baby. Meaning you will require care when you are born and again leading up to your death. Running on empty will only get you so far. Saving for your future will prevent you from living in some low-income assisted living facility in dirty diapers.


And most importantly, stop comparing yourself to the rich. Opportunity exists to everyone. Make a plan and stick to it.

Awesome nuggets of wisdom here. Of course, the latter will fall upon deaf ears of those who are focused on seeking out excuses not to get after it. Which, of course, includes laying on the ground whimpering when they fall off the horse.

The only way you fail- and "succumb"- is to not keep getting back up on the horse.

As for the OP- You remind me of myself- seriously immature when it comes to money. Seriously immature. $40K for a vehicle? Ridiculous. Not to mention making yourself a big payment by putting your family's home at risk. I have at least stopped that stupidity, and spent three years living like a pauper to pay off all my debt except house, which will be done this year.

What all those trying to justify borrowing conveniently ignore is RISK. I found out the hard way. I borrowed assuming I could always out-earn my stupidity- and I did... for awhile. When the economy crashed, so did my income, and I narrowly avoided losing everything. But the stress of those years damaged my health. Today I'm doing well but can never get those years- or that part of my health- back.

I'm still trying to learn how to be an adult about handling money. I have to, because I don't want to get to the end of my working years and find I'm broke. And even worse, giving up so I can indulge my whims, at the cost of my family's security- like the OP has done.

The truth is the truth, whether we choose to receive it or not.