Debt
07-30-2015, 08:43 PM
#1
With The Resistance
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Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
07-30-2015, 11:16 PM
#2
Gets Weekends Off
Joined APC: Nov 2012
Position: ERJ, CA
Posts: 718
This goes back to "keeping up with the Joneses" of the 50's and 60's. Only back then, most mom's didn't work. Now it takes two parents to work and they still have a hard time getting ahead. A real culprit is the housing bubbles our govt. is creating, a lot of people are "rich" due to rising home values, but using that wealth to buy things that depreciate.
Govts. are creating irrational conditions so people are responding by acting "irrationally". The trouble is, economics is defined as the study of rational behavior; so conventional economics is out the window. Now we need to study the effects of the policies of the depression, Argentina and Brazil in the past to find out what we may be in for. Talk to a Russian who lived through the 90's for an eye-opening account of what happens when banks fail.
Our policies punish the responsible. Housing prices went thru the roof due to no money down loans and easy credit. Those who saved up for a deposit and wanted to wait to put money down found themselves priced out of the mkt. Therefore, the financially responsible were forced to be irresponsible or lose the sale as prices rose irrationally. Sure you could wait for the bubble to burst, but meantime you are throwing money away on rent. The banks were bailed out by taxpayer funds, then proceeded to sit on the thousands of homes in foreclosure so the frugal home buyer could not get one. They then sold them for a song to Wall Street hedge funds who either rent them out or created a shortage in order to drive up prices--with govt. assistance.
It is essential to teach your kids early. Give them chores to earn money, tech them to save, and be good financial role models.
Since our production economy has been outsourced, everything is based on the finance economy. That only works through usury and for it to work people have to be nearly coerced into spending. In Japan they have had negative interest rates for years and in Switzerland now, you actually are charged to keep money in the bank.
You can't get prosperous doing each other's laundry.
I disagree with the part about hospital greed. They are forced to treat the uninsured and "undocumented" who will never pay for the services. So they cost shift. That's why a bandage costs $50.00. A friend of mine got a dog bite, he went to the ER. The dog wasn't rabid, so they gave him a tetanus shot, a cleaning, and a bandage. $400.00. They would have charged the insurance company $1500.00.
A college education is now another form of racket. 50 years ago a high school education was enough for the average person, then you needed an undergrad degree, now you need a masters. It is such a racket. In and undergrad degree you waste 2 years on stuff you should already know in HS, and then spend 2-3 years on your subject. I really think it is essential for the upcoming generations to learn skills which cannot be outsourced! Nowadays the internet makes actual learning cheaper and easier then ever. Adult ed is sometimes very good value too.
Govts. are creating irrational conditions so people are responding by acting "irrationally". The trouble is, economics is defined as the study of rational behavior; so conventional economics is out the window. Now we need to study the effects of the policies of the depression, Argentina and Brazil in the past to find out what we may be in for. Talk to a Russian who lived through the 90's for an eye-opening account of what happens when banks fail.
Our policies punish the responsible. Housing prices went thru the roof due to no money down loans and easy credit. Those who saved up for a deposit and wanted to wait to put money down found themselves priced out of the mkt. Therefore, the financially responsible were forced to be irresponsible or lose the sale as prices rose irrationally. Sure you could wait for the bubble to burst, but meantime you are throwing money away on rent. The banks were bailed out by taxpayer funds, then proceeded to sit on the thousands of homes in foreclosure so the frugal home buyer could not get one. They then sold them for a song to Wall Street hedge funds who either rent them out or created a shortage in order to drive up prices--with govt. assistance.
It is essential to teach your kids early. Give them chores to earn money, tech them to save, and be good financial role models.
Since our production economy has been outsourced, everything is based on the finance economy. That only works through usury and for it to work people have to be nearly coerced into spending. In Japan they have had negative interest rates for years and in Switzerland now, you actually are charged to keep money in the bank.
You can't get prosperous doing each other's laundry.
I disagree with the part about hospital greed. They are forced to treat the uninsured and "undocumented" who will never pay for the services. So they cost shift. That's why a bandage costs $50.00. A friend of mine got a dog bite, he went to the ER. The dog wasn't rabid, so they gave him a tetanus shot, a cleaning, and a bandage. $400.00. They would have charged the insurance company $1500.00.
A college education is now another form of racket. 50 years ago a high school education was enough for the average person, then you needed an undergrad degree, now you need a masters. It is such a racket. In and undergrad degree you waste 2 years on stuff you should already know in HS, and then spend 2-3 years on your subject. I really think it is essential for the upcoming generations to learn skills which cannot be outsourced! Nowadays the internet makes actual learning cheaper and easier then ever. Adult ed is sometimes very good value too.
Last edited by bedrock; 07-30-2015 at 11:46 PM.
Borrowing
08-03-2015, 06:18 AM
#5
Gets Weekends Off
Joined APC: Jan 2014
Posts: 218
Originally Posted by bedrock
Sure you could wait for the bubble to burst, but meantime you are throwing money away on rent.
It's listed for $239,000. The Zestimate is $202,359 and the Rent Zestimate is $1,440. According to Zillow, if I have a credit score in the 720 - 739 range, I can get a 3.761% APR on a 30 year fixed rate mortgage. Let's assume I can buy the house for the Zestimate instead of the asking price.
$750 - Mortgage
$211 - Property Taxes (31.324 millage on 40% of Fair Market Value)
$168 - Maintenance (1% of value of home)
$71 - Insurance ($35 per $100,000 value)
$270 - Opportunity Cost ($40,472 down payment at 8% return)
$1,470 a month to buy the house. $1,440 a month to rent the house. It gets worse if we actually pay the asking price.
It's sometimes cheaper to rent the house. Renting provides greater flexibility both geographically and financially. It also has less downside risk. Housing returned 0.4% per year from 1890 to 2004. Buying a house is a large, concentrated, illiquid commitment of capital. It's not always the smart choice even if you can afford it.
I realize that the case for buying gets better if you can assume you're going to stay in the house for 30 years and take advantage of the fixed interest rate 10 or 20 years from now when inflation has devalued your mortgage payments, but that's a pretty big assumption for a lot of us.
Buying a house exposes one to a lot more risk than renting. In many cases, renting is better financially than buying.
Originally Posted by bedrock
A college education is now another form of racket.
08-03-2015, 06:00 PM
#6
With The Resistance
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Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
Good points all.
Bubbles are more predominant in some areas, some areas are more prone to real growth, some areas are prone to large scale economic exodus.
Choose carefully. Pay cash if you can.
Don't buy a white elephant in a high tax, low growth area.
Bubbles are more predominant in some areas, some areas are more prone to real growth, some areas are prone to large scale economic exodus.
Choose carefully. Pay cash if you can.
Don't buy a white elephant in a high tax, low growth area.
08-06-2015, 08:02 AM
#7
Gets Weekends Off
Joined APC: May 2015
Position: Right Seat - Low Wing
Posts: 229
Originally Posted by bedrock
This goes back to "keeping up with the Joneses" of the 50's and 60's. Only back then, most mom's didn't work. Now it takes two parents to work and they still have a hard time getting ahead. A real culprit is the housing bubbles our govt. is creating, a lot of people are "rich" due to rising home values, but using that wealth to buy things that depreciate.
Govts. are creating irrational conditions so people are responding by acting "irrationally". The trouble is, economics is defined as the study of rational behavior; so conventional economics is out the window. Now we need to study the effects of the policies of the depression, Argentina and Brazil in the past to find out what we may be in for. Talk to a Russian who lived through the 90's for an eye-opening account of what happens when banks fail.
Our policies punish the responsible. Housing prices went thru the roof due to no money down loans and easy credit. Those who saved up for a deposit and wanted to wait to put money down found themselves priced out of the mkt. Therefore, the financially responsible were forced to be irresponsible or lose the sale as prices rose irrationally. Sure you could wait for the bubble to burst, but meantime you are throwing money away on rent. The banks were bailed out by taxpayer funds, then proceeded to sit on the thousands of homes in foreclosure so the frugal home buyer could not get one. They then sold them for a song to Wall Street hedge funds who either rent them out or created a shortage in order to drive up prices--with govt. assistance.
It is essential to teach your kids early. Give them chores to earn money, tech them to save, and be good financial role models.
Since our production economy has been outsourced, everything is based on the finance economy. That only works through usury and for it to work people have to be nearly coerced into spending. In Japan they have had negative interest rates for years and in Switzerland now, you actually are charged to keep money in the bank.
You can't get prosperous doing each other's laundry.
I disagree with the part about hospital greed. They are forced to treat the uninsured and "undocumented" who will never pay for the services. So they cost shift. That's why a bandage costs $50.00. A friend of mine got a dog bite, he went to the ER. The dog wasn't rabid, so they gave him a tetanus shot, a cleaning, and a bandage. $400.00. They would have charged the insurance company $1500.00.
A college education is now another form of racket. 50 years ago a high school education was enough for the average person, then you needed an undergrad degree, now you need a masters. It is such a racket. In and undergrad degree you waste 2 years on stuff you should already know in HS, and then spend 2-3 years on your subject. I really think it is essential for the upcoming generations to learn skills which cannot be outsourced! Nowadays the internet makes actual learning cheaper and easier then ever. Adult ed is sometimes very good value too.
Govts. are creating irrational conditions so people are responding by acting "irrationally". The trouble is, economics is defined as the study of rational behavior; so conventional economics is out the window. Now we need to study the effects of the policies of the depression, Argentina and Brazil in the past to find out what we may be in for. Talk to a Russian who lived through the 90's for an eye-opening account of what happens when banks fail.
Our policies punish the responsible. Housing prices went thru the roof due to no money down loans and easy credit. Those who saved up for a deposit and wanted to wait to put money down found themselves priced out of the mkt. Therefore, the financially responsible were forced to be irresponsible or lose the sale as prices rose irrationally. Sure you could wait for the bubble to burst, but meantime you are throwing money away on rent. The banks were bailed out by taxpayer funds, then proceeded to sit on the thousands of homes in foreclosure so the frugal home buyer could not get one. They then sold them for a song to Wall Street hedge funds who either rent them out or created a shortage in order to drive up prices--with govt. assistance.
It is essential to teach your kids early. Give them chores to earn money, tech them to save, and be good financial role models.
Since our production economy has been outsourced, everything is based on the finance economy. That only works through usury and for it to work people have to be nearly coerced into spending. In Japan they have had negative interest rates for years and in Switzerland now, you actually are charged to keep money in the bank.
You can't get prosperous doing each other's laundry.
I disagree with the part about hospital greed. They are forced to treat the uninsured and "undocumented" who will never pay for the services. So they cost shift. That's why a bandage costs $50.00. A friend of mine got a dog bite, he went to the ER. The dog wasn't rabid, so they gave him a tetanus shot, a cleaning, and a bandage. $400.00. They would have charged the insurance company $1500.00.
A college education is now another form of racket. 50 years ago a high school education was enough for the average person, then you needed an undergrad degree, now you need a masters. It is such a racket. In and undergrad degree you waste 2 years on stuff you should already know in HS, and then spend 2-3 years on your subject. I really think it is essential for the upcoming generations to learn skills which cannot be outsourced! Nowadays the internet makes actual learning cheaper and easier then ever. Adult ed is sometimes very good value too.
On point 100%
08-08-2015, 08:37 AM
#8
With The Resistance
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Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
08-09-2015, 09:46 AM
#9
Bracing for Fallacies
Joined APC: Jul 2007
Position: In favor of good things, not in favor of bad things
Posts: 3,543
Interesting thread. Not sure how anybody buys a house outright though. At least not below age 30 and no help from the family...but yes, keeping up with Jones's indeed.
08-09-2015, 02:58 PM
#10
Gets Weekends Off
Joined APC: Apr 2005
Posts: 1,399
If you are staying put, buying is the best option unless it is a depreciating area. Also paying a mortgage is a good idea even if you can pay cash. The mortgage deduction plus the time value of money make it a worthwhile investment. the $1500 (or whatever) that you pay on the mortgage is worth much less 20 years from now, while renting the same place would cost substantially more.
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