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Used cars are not bought by average Americans. There are two kinds of Americans. Those who have 5+ digits in their savings/investment, and those who buy used cars and make payments. There is not much of a gray area between them. Actually, there are three kinds. My neighborhood was populated by people who rent-to-own their furniture and 60-inch home entertainment center from Aarons, and pay 600% interest.
You certainly are wearing some strong rose colored glasses LOL
I’m not sure why that matters. The changes effect a lot of people and since nearly half of mortgage holder didn’t itemize prior to this year that number will only go up. That means more than half of homeowners would derive zero taxable benefit from owning a primary residence
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To pay $10k in property tax here, one would need a house worth almost $2 million.
Okay?
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I’ve always needed to itemize while holding a mortgage.
With the standard deduction doubling will you still itemize? Even if the answer yes the taxable benefit has been greatly diminished
Stock market is often better. Instead of leaving your savings in the bank, invest instead. The $150k in your example might well grow to more than $300k. Historically, houses only keep up with inflation, while stocks do better. Of course the house has an added benefit of saving on rent, but this benefit is often overstated because even a free and clear owner has to pay for upkeep, insurance, taxes, repairs, and remodelling. Other costs that may apply to some owners are HOA dues, landscaping, and lost wages if the owner takes off work to meet a repair technician or does other work him- or her- self.
Run the numbers, never simply assume!
Here they don’t. I live near the beach and houses appreciate far more than inflation.
Mortgages are a hedge against inflation. In hot markets some people can se their rent go up as high as $1000 a month. Mortgages don’t do that. You’re locked in at the price the house was when you bought it even if it was 30 years ago.
When you move you take that equity with you. Rent here is much higher than mortgages so there is no extra to invest in the stock market. You still need a roof over your head, might as well collect some equity while you’re at it.
When the house is paid off and you retire, cash it in and move to a place with a cheaper COL and pay off that mortgage with your equity. Now you can retire sooner because you won’t have to worry about paying for rent in your retirement years and you’ll need less monthly income.
Remember, maintenance and upkeep is already factored into your rent. That is not to be factored into your savings.
Just pay cash for the car. I always hear a form of the argument that 'I took out the loan then invested the money and made a huge profit on the spread'. BS - the average person making the argument went on vacation or spent the money some other way. That is why Americans, as a whole, have no money saved and live pay check to pay check. My recommendation is always buy the car you can afford to pay cash for. Debt is a trap.
I will dismount my soapbox now.
Not a bad point, but burned my biscuit. If you're an unsophisticate, like OP, and can't understand concepts like NPV, discount rate, inflation, etc. the calculation makes no sense whatsoever anyway of course.
But "paying cash" for a major asset isn't a swell idea for most people. One, they don't have the cashflow and couldn't put $10K together if it meant the firing squad. Two, that last $30K I had in cash I dropped into an couple year safe investment that yielded a couple thousand in profit, after inflation and three years of course. Nothing wonderful, nothing Vegas would find sexy, but better than "paying cash" for (anything).
Well, guess I'm not the average American though. Now I'll hop off *my* soapbox.
I’m not sure why that matters. The changes effect a lot of people and since nearly half of mortgage holder didn’t itemize prior to this year that number will only go up. That means more than half of homeowners would derive zero taxable benefit from owning a primary residence
Okay?
With the standard deduction doubling will you still itemize? Even if the answer yes the taxable benefit has been greatly diminished
It’s still better than the renting benefit (which is $0). I’ve been itemizing since my first starter home making entry level pay with no kids. If people weren’t itemizing they were probably paying far too much in taxes.
You do realize capping $10k in property tax effects very few people right? Not everybody lives in New York or Boston.
This generalization is oversold to people as well. Buying a house often isn’t a great investment, it’s often a huge expense, liability that appreciates around the rate of inflation with the exception of some hot markets. The tax benefits have deminshed some and if you have to sell in the first 1-5 years it’s probably going to turn out to be a poor experience. That also doesn’t take into account the fact that most people buy more and nicer than they rent which actually throws off any comparisons anyhow
I guess I should go back to high school and rethink my life strategy that I mapped out when I was a senior because apparently I had it all wrong. lol
I never rented a house or an apartment in my life. I bought my first house in my early 20's and paid it off in 12 years. I lived there without a house payment for a while after I paid it off. I then bought a big nice house and remodeled. I rent my old house out and use their money to pay most of the mortgage on the current house so I basically still almost have no mortgage payment coming out of my pocket. I also needed a place for my business and leased one for a couple of years and then bought it. Then the property next door came up for sale and I bought it too and combined the commercial mortgage on the two properties to have one payment. I now almost have both of them paid off and will begin to rent them out as well in a couple of years.
I have friends who are around the same age as me who are "thinking" about buying their first house. They have been renting the whole time I have been buying and paying for my own properties. Of course these are the same type that are constantly trading in their cars and buying new ones and essentially renting cars as well and never paying one off. They are consistently paying car payments with no end in sight.
So are you really trying to convince me that they are as well off or better off financially than I am? lol
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Originally Posted by Sharpydove
Mortgages are a rip-off. Study your amortization chart and see what you end up paying for the house. Add in increased property taxes, repair, upgrades, remodels, maintenance. No thanks.
This makes absolutely no financial sense whatsoever.
All I can say is thank you to all of you that rent. Us property owners appreciate the income you provide.
It’s still better than the renting benefit (which is $0).
Well renting provides some benefits like a place to live, more location flexibility, the ability to rent only space you need like a one bedroom apartment or even a room in someone’s house. Saying the benefit is 0 is simply just being shortsighted
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I’ve been itemizing since my first starter home making entry level pay with no kids. If people weren’t itemizing they were probably paying far too much in taxes.
Why would you assume people who don’t itemize pay far too much in taxes? In most cases people with mortgages who don’t itemize don’t have enough deductions to itemize. Again you are off base with this thought process.
You do realize the standard deductions almost doubled from 2017 to 2018 right? So if prior to this tax year many mortgage holders didn’t itemize, even less will in 2018, common sense eh?
For single filers the standard deduction moved from 6350 to 12,000 and mfj from 12,700 to 24,000.
So many people will no long itemize. Even if you do however the taxable benefit only exist on the dollars that exceed that standard deduction. Meaning if you are MFJ and have 30k in itemized deductions only 6k of all your deductions benefits you at all. If you have 24k or less in total deductions owning a house provides you Zero benefits on your income tax annually(with the caveat of possibly capital gains exclusion)
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You do realize capping $10k in property tax effects very few people right? Not everybody lives in New York or Boston.
Well the cap is actual for state and local taxes. Which would include property tax, state income tax and sales tax. I hit the 10k in property tax alone, pay no income tax but have been able to deduct sales tax in prior years.
I guess I should go back to high school and rethink my life strategy that I mapped out when I was a senior because apparently I had it all wrong. lol
I never rented a house or an apartment in my life. I bought my first house in my early 20's and paid it off in 12 years. I lived there without a house payment for a while after I paid it off. I then bought a big nice house and remodeled. I rent my old house out and use their money to pay most of the mortgage on the current house so I basically still almost have no mortgage payment coming out of my pocket. I also needed a place for my business and leased one for a couple of years and then bought it. Then the property next door came up for sale and I bought it too and combined the commercial mortgage on the two properties to have one payment. I now almost have both of them paid off and will begin to rent them out as well in a couple of years.
I have friends who are around the same age as me who are "thinking" about buying their first house. They have been renting the whole time I have been buying and paying for my own properties. Of course these are the same type that are constantly trading in their cars and buying new ones and essentially renting cars as well and never paying one off. They are consistently paying car payments with no end in sight.
So are you really trying to convince me that they are as well off or better off financially than I am? lol
This makes absolutely no financial sense whatsoever.
All I can say is thank you to all of you that rent. Us property owners appreciate the income you provide.
Maybe you should attempt to re-read my post and understand it because I’m not sure how you possibly thought I was attempting to convince you someone else was better off than you are. The financial benefits of owning are in fact very often oversold. The tax benefits have greatly deminished and if you have to sell in years 1-5 it often will turnout to be a poor experience. Like I said make a run a reading what you quoted
Was this your first loan? Just curious, because that is how loans work. That is one way banks, credit unions, etc make money.
No, Ive financed numerous cars thru them over the years. Payment has been late a few times here and there, but never any other problems.
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