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Message
re: What is your opinion on credit?
Posted on 5/18/15 at 11:07 am to TheCaterpillar
Posted on 5/18/15 at 11:07 am to TheCaterpillar
I keep waiting for the Shreveport market to take off....
1
Posted on 5/18/15 at 11:08 am to Salmon
quote:
I keep waiting for the Shreveport market to take off....
Might be waiting a while
Posted on 5/18/15 at 11:08 am to VetteGuy
quote:Should've hung yourself in the office before you left.
I am still pondering my next move...
Don't be MAD
Posted on 5/18/15 at 11:09 am to VABuckeye
I'm not complaining about it, I just try to plan for inflation. Posted on 5/18/15 at 11:09 am to VABuckeye
quote:
Northern Virginia market.
I made a few bucks jumping around from house to house in Jupiter, Fl a few years, miraculously, and by sheer luck, got out right before the real estate market tanked, I have one rental left down there, fortunately it was the cheapest one and was paid off, it's starting to come back a bit
Posted on 5/18/15 at 11:11 am to BigEdLSU
quote:
Sure I'd like a nice new home in a stable neighborhood, but until I can afford to build it with cash, I won't get it. Sure, it may take me 10 years (random number there with no real base) to save up for an expense like that, but why would I want to pay 500k over 30 years for a 200k home?
:youarereallydumbgif:
Posted on 5/18/15 at 11:14 am to BigEdLSU
To go back to your original question.
I use credit to my advantage. I charge an amount on credit cards each month that would make some people freak out but like you I own a business. I run pretty much every business expense through credit cards. In return I get to take vacations at a much lower cost than someone that would pay for the vacation. I enjoy traveling so it works for me.
I don't pay a dime of interest on credit cards. Every month the statement balance is paid in full. Additionally, we worked hard and paid extra on our mortgage over the years and paid the house off. FYI, this also eliminates interest on the mortgage so your number for interest paid shrinks dramatically which also effectively reduces the interest rate you are paying by a ton.
Credit used properly is a great thing. Credit used irresponsibly ruins lives.
I use credit to my advantage. I charge an amount on credit cards each month that would make some people freak out but like you I own a business. I run pretty much every business expense through credit cards. In return I get to take vacations at a much lower cost than someone that would pay for the vacation. I enjoy traveling so it works for me.
I don't pay a dime of interest on credit cards. Every month the statement balance is paid in full. Additionally, we worked hard and paid extra on our mortgage over the years and paid the house off. FYI, this also eliminates interest on the mortgage so your number for interest paid shrinks dramatically which also effectively reduces the interest rate you are paying by a ton.
Credit used properly is a great thing. Credit used irresponsibly ruins lives.
Posted on 5/18/15 at 11:15 am to BigEdLSU
quote:
why would I want to pay 500k over 30 years for a 200k home?
Because 500K paid over 30 years is worth 200K today, that's why. Every currency depreciates some.
A fixed-rate loan used to purchase an asset (such as a house) is something of an inflation hedge. This is not necesarily a bad thing at all.
Posted on 5/18/15 at 11:16 am to VABuckeye
I don't think I can find something in your post to disagree with 
I wouldn't define that as being dependent on credit. I assume that there are tens if not hundreds of millions without that self-control worldwide.
I wouldn't define that as being dependent on credit. I assume that there are tens if not hundreds of millions without that self-control worldwide.
This post was edited on 5/18/15 at 11:17 am
Posted on 5/18/15 at 11:17 am to foshizzle
quote:
Because 500K paid over 30 years is worth 200K today, that's why. Every currency depreciates some.
Not to mention that the home will appreciate which will give him equity, all of the interest is tax deductible etc...
Posted on 5/18/15 at 11:18 am to BigEdLSU
quote:
I assume that there are tens if not hundreds of millions without that self-control worldwide.
well of course, that is why credit card companies are worth billions
but because a bunch of people are dumb, that doesn't mean you should be afraid of credit
Posted on 5/18/15 at 11:19 am to foshizzle
That doesn't make sense. You are depositing money that is worth more at the time of deposit than it is worth when you cash out.
You potentially pay the 500k over time, cash out at 500k, but if the money would have grown with or above inflation rates, it would have been worth more. Much more.
You potentially pay the 500k over time, cash out at 500k, but if the money would have grown with or above inflation rates, it would have been worth more. Much more.
Posted on 5/18/15 at 11:19 am to BigEdLSU
credit cards are a great thing. they allow the consumer to stay liquid at all times. there are just a lot of idiots who don't know how to use them correctly.
Posted on 5/18/15 at 11:22 am to yellowfin
quote:
Thanks Dave
Great response, but as a Dave follower AS WELL as someone who isn't afraid of debt, I'd like to point out that even Dave Ramsey treats mortgages differently than other debts.
He sees no issue with taking on home debt, as he's also a huge preacher of investing, and he notes what many have said in this thread: Homes are awesome investments. His main thing is to make sure the monthly payments are within your means, and you should put down (ideally) a solid 25% down payment.
Posted on 5/18/15 at 11:22 am to BigEdLSU
quote:
That doesn't make sense. You are depositing money that is worth more at the time of deposit than it is worth when you cash out. You potentially pay the 500k over time, cash out at 500k, but if the money would have grown with or above inflation rates, it would have been worth more. Much more.
You are a lost cause!
Posted on 5/18/15 at 11:26 am to BigEdLSU
Holy crap, that's the entire point
The amount paid has nothing to do with the value of the house at the end.
You're using your money elsewhere and getting a higher return
The amount paid has nothing to do with the value of the house at the end.
You're using your money elsewhere and getting a higher return
This post was edited on 5/18/15 at 11:27 am
Posted on 5/18/15 at 11:29 am to BigEdLSU
You can do what you want but the availability of credit has been a big contributor to building the middle class in this country
Posted on 5/18/15 at 11:32 am to BigEdLSU
So you think no one should be able to live in a house without 100k+ in cash? Let's think about how dumb this is.
Posted on 5/18/15 at 11:33 am to VABuckeye
quote:
Additionally, we worked hard and paid extra on our mortgage over the years and paid the house off. FYI, this also eliminates interest on the mortgage so your number for interest paid shrinks dramatically which also effectively reduces the interest rate you are paying by a ton.
While I appreciate this school of thought... have also read that you're better off paying the minimum on the loan and putting whatever money you would have used paying it down early into an IRA or other retirement vehicle. Especially since the interest is deductible. This probably assumes a low rate, I'm sure there's a point at which paying down the principal faster makes more sense too.
Posted on 5/18/15 at 11:33 am to Overbrook
Question:
What is the definition of middle class? Is it a certain bracket of income? Is there a sliding scale for age groups?
What is the definition of middle class? Is it a certain bracket of income? Is there a sliding scale for age groups?
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