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No, actually if you respect Suze Orman, which I do, it is not good financial sense to take out your equity for college, never. Nor is it good financial sense to mess with your stock market money for college unless it's in a college fund for that purpose, but why would you direct that money that you need for college to the stock market when the kids are approaching college age? I mean, everyone knows the market is cyclical and you won't ever LOSE money in about a 15 year period but no guarantee before.
Stock market playing is for the people that are in it for the long term not people like us who have to pay for college "soon" and especially using that money.
Suze Orman STRONGLY feels that no parent is OBLIGATED at the risk of their home and retirement to pay for college especially expensive colleges and colleges they couldn't save enough for over the years or because the kid (or parents) want them to attend a school that is financially beyond their means. She says get loans, grants and go to cheaper schools.
In PA we have a great cheap multiple school state school system. You might be familiar with them. Temple. Penn State. Temple and Penn State are about 10,000 per year and the other several state schools are about 5000.00 and community colleges are about 3000.00. That's the ballpark of FAU I think. Even if you tapped equity, 3000.00 is alot better per year than say, 25000. And with the loss of compound interest you're losing a hell of alot more than 25000. And the "legitimate" (not private) student loans are low interest.
Anyway, please don't drain your retirement investments or equity. There are loans and grants and cheaper schools. That advise is from Suze Orman, not me. By the way as a parent of a 28 year old, it won't hurt your son one bit to take loans or go to a lesser school for a couple years IMO. Mine went to Lynn ...I spent a fortune and it was a total waste of money and he could have learned alot more at a PA state school than that ridiculously expensive private school. What a waste of tuition. It was like the 13th grade AND you couldn't even depend on the counselors to put the damn kid in the right courses. He started freshman year with no core courses they were "full". When I finally resolved that it was 6 weeks into it, I had to go all the way to the head of the University, and he still had to take an extra year to catch up. What a racket.
And sorry, I don't think everyone will be poorer. This is fake money you see everyone waving around. All started with Regan and everybody thinking they deserved 2 BMWs, mc mansions, several vacations etc... when they saw all the wall street brokers and drug money people having them.
Now we're going to actually see people (maybe) living within their "actual" means. I hope.
Although I have to say, a new Marshalls opened here and you couldn't get into the parking lot for two days.
I LOVE Suze Orman! Read the story about my dad above - you can never have enough money for retirement, and I wouldn't sacrifice that to pay my son's tuition. But, I will sacrifice new cars, vacation, etc in order to keep millions in the bank that I believe we will all need someday. My son will be going to grad school, so it is actually grad school that has me a wee bit more concerned (we have the Florida Prepaid program for undergrad, plus he has 1580 SATs (M_V - with writing, 2340), etc so he is only applying to selective high endowment schools that have no loans, only grants like Davidson/Vassar/Amherst, etc.) My nephew is in a fellowship program at Johns Hopkins in Physics where they pay him, but my son wants to study linguistic anthropology which I've researched and it's not like they're paying kids in that area for their PhDs! My daughter wants to be a photographer (she has already been published, won awards, etc.) and that's a WHOLE other can of worms and there is no money for that field for undergrad, so we'll have to find the money for that as well. It was a killer to learn we had lost both their tuitions between the stock market and housing crash.
Ironically, I know we're among the richest and the luckiest, but I feel like I'm more worried than everyone else, having a front seat for seeing how fast the money went in the last few years. Yes, we've lost 25-50 % over that time, but we still have millions left. But, we've lost millions too. Oh, and our business is doing horribly, so it's practically like we're retired now! If we're in trouble, everyone is in trouble. Own your homes at the very least, is all I'm saying!
And, as far as when it started, I think it was during Reagan as well, and came from all the second incomes from women going to work. Next time, I think it will be families all moving in together in order to make ends meet - this is already happening with immigrant families. People will keep their standard of living as long as they can. That's why they come here.
I'm with you 100% on being compassionate for those who are suffering, with things beyond their control. We're eye to eye on that one, but read my posts again. The greedy ones need to learn from their mistakes. I know many may not, but some should have seen the light by now. Will they forget? Maybe, but a lesson has been learned for many.
I dont think we have to worry about not being able to lease in the near future. Yes, the lease idea is a good one for many, but now many companies are not seeing it as profitable, hence the hikes, or bailing out altogether (Chrysler Financial, for one). There are plenty of clean, good used cars on the lots......And plenty of clean reposessed cars for sale.
You just dont pay for the initial first 2-3 year depreciation. I know, I strike many as frugal, and for good reason too. I'm only 33, and am not rich, but doing good, and debt free (I seldom use my only card, Amex knowing I already have the money to get what I want, just as protection versus debit, and still dont pay interest at the end, cause it's paid for). I have friends my age making way more than I do and cant live without overtime at their jobs, or are still maxing credit cards for nonsense. Thank God many don't have kids. I'll feel bad if they ever do, at the rate they're going..
I think I've ranted enough...
By the way, Fauve, I have read that book. I love it....I love it, I love it. . You are so right about that last statement..
Oh good, so we're on the same page (so to speak!) I like car leases because it allows someone to buy a reliable car with a warranty for $1k down and under $200/month. Once there are no leases, the downpayments and the monthly payments will be a lot larger - and the maintenance will be a lot more expensive. We own our cars, but that's because we could afford to. Kind of like renting vs buying a home. Only there's no tax deduction and it depreciates and doesn't last for hundreds of years
I made my comments strong in response to yours - you really were going overboard calling people all kinds of names. And, of course it makes financial sense to pay tuition from a HELOC when you're paying taxes above what you would be paying in interest plus earning more than the interest in the stock market. It's a no lose...which is why when HELOCs dried up, it gave more people a reason to get out of the market.
And, why rent? Again, tax deductions. Maybe it's just because I majored in accounting, but taxes are a lot higher the more you earn minus less what you can deduct. Earning less puts you in whole new tax brackets. Rent doesn't lead to ownership - I bought my first house at 27 - I am now 47. 20 years goes by fast! And, then it's only 10 or so years to retirement and whole new expenses you never thought you would have - health care, tuition, inflation, etc.
For example, my Dad died recently at 81 with $1.25 million, mostly in bonds and high yield dividends (4% range). He was living in a one bedroom apt (he never bought a house) and paid $643/month for rent in blue-collar Bloomfield, NJ - he had been in the apt for 40 years! He collected social security and a small pension. His TOTAL yearly income was just under $43k from the investments (before SS and pension - another $25k or so)! That's it FIFTY THOUSAND, on $1.25 MILLION. He drove a car he has owned for 15 years - a Ford pick-up. He was able to help me buy my first house, but made few other large purchases - mostly just reinvested. And, paid close to $5k a year in taxes (and, that's after all those municipal bonds to avoid NJ tax!). If he had bought a house 40 years ago, and used a fixed mortgage, that small mortgage would have been paid off a long time ago and he would have lived in a really nice place, and it would have cost him a lot less than $643/month over the 30 years he had it and given him the tax deduction! Instead he couldn't afford to live in a nice place because of inflation - he needed that bond income to make ends meet after he retired. He scrimped and saved to increase that income. And, he had social security and a pension!!! We're looking at maybe not having either! And, a whole lot of inflation coming our way.
Maybe that's why I'm so passionate about buying real estate - yes, there will be lows, but don't get caught with the years going by, and prices getting ahead of you, and not investing and getting rid of that major expense for when you're older. Cash, even if saved month after month (which his country is not doing), has to grow really high before it starts paying well.
Most people in this country built their wealth through their homes. I am just afraid that that opportunity will not be here in the future - that there is a short window beofre banks pull back on mortgages, and you won't be able to finance a house when it hits bottom because you won;t have the cash. I looked through those articles the last time you posted them. I really believe this time is different. Some are calling it the Greater Depression. Get a low rate fixed mortgage if and when you still can.
And, btw, I listen to CNBC in the background all day. It was your idea to invest in commodities when I asked you what you thought the next bubble would be 2 weeks ago. Gold is down over 20% since March, oil as well, silver is doing horribly, potash worse. The commodities bubble has already burst. You're behind the curve, Wild Style. Don't make the same mistake with real estate.
And, we all knew our houses were rising in value in 03. I sold in 04 thinking it would soon be over, but happily I only got out of the tract housing market, and kept a mortgage - I wouldn't be able to afford my house now if I hadn't., and I would be paying a lot of taxes...although I would be free.
Another point re HELOCs - I think a lot of people were using them to compensate for low wages as well - wages didn't really increase in the last 8 years, and high heath care expenses - ours run $12,000/year including insurance payments.
we will agree to disagree
As for the housing market, as I said, this same thing happened during the great depression and it happened during S&L and after each one, guess what? people were able to buy homes. Our economy is changing, thats the difference now. To think you won't be able to get a loan though in the end is a bit much. By the way, during the S&L days, there was a credit crunch just like this one and the same thing happened in the great depression. This is no different. Unless they change the way our money is created, America can not afford to cease giving loans long term. Debt/credit is how our money supply is created. well not entirely but for the most part thats how it grows.
Buying a home is good for those who can afford ownership which is not just buying a home but maintaining that home as well. For others it makes sense to rent. Living outside ones means is utterly ridiculous. It also hurts America long term. Anyone doing so is part of the problem. Just as I feel buying a depressiating object doesn't make much economic sense as well.
Also, you need to learn about trends. A trend isn't a few weeks or a month. It is year over year. If you are watching commodities every day and basing your ideas on fluctiations then maybe you shouldn't be in that market. The same thing happened with oil back in 2005. Proclomation of the "end of the oil bubble" link yet here we are with oil higher than ever. You should also note, oil climbs, then comes back down a little just as it did back in 2005 and then it started its climb again. Demand is down right now, mostly becasue China curbed its oil consumption for the olympics. That was part of their agreement with the olympic committee. They had to reduce smog. So they shut down some factories and stopped people from driving in parts of beijing. What happens when those factories come back online and people start driving again? America has curbed its demand for oil as well but developing countries are starting to demand more and more of the stuff, offsetting America's drop in demand. When playing the markets you need to have a clear understanding of economics and how all this works. Then you can make very good decisions in investing and how this all will play out. Other wise you will be watching this stuff day after day and getting all freaked out.
I don't know WS. A 20% drop in 3 months sounds like a crash to me. I'm not in commodities anymore. I bought gold in 04 for $348 and sold it last year when it hit $850. It hit $1000 in March. To me, that's a trend over 4 years and it seems now like a bubble that has burst. I don't know when or if you're in commodities, but I'm just saying, I think it's a dangerous place to be right now. I would make it no more than 5% of a portfolio. And, btw, I understand economics. With accounting as a major, I ended up practically minoring in economics. Not to mention, but my step-father taught econ at the university I attended as well.
I don't know WS. A 20% drop in 3 months sounds like a crash to me. I'm not in commodities anymore. I bought gold in 04 for $348 and sold it last year when it hit $850. It hit $1000 in March. To me, that's a trend over 4 years and it seems now like a bubble that has burst. I don't know when or if you're in commodities, but I'm just saying, I think it's a dangerous place to be right now. I would make it no more than 5% of a portfolio. And, btw, I understand economics. With accounting as a major, I ended up practically minoring in economics.
again, it happened in 2005 and then went right back up in the coming years. Any economist will tell you, you do not chart trends based on months. Thats like seeing a uptick in home sales one month and calling bottom. Doesn't work like that.
Why do you keep saying I am looking in months? I've been tracking gold for 4 years. stayed in in 05 because I suspected it was a temporary dip. This time I don't. Where did you get your econ degree? I thought you were in IT. And, I have never suggested anyone live outside their means. I've always said buy now if you can find a house you like and can afford.
Why do you keep saying I am looking in months? I've been tracking gold for 4 years. stayed in in 05 because I suspected it was a temporary dip. This time I don't. Where did you get your econ degree? I thought you were in IT. And, I have never suggested anyone live outside their means. I've always said buy now if you can find a house you like and can afford.
I am referring to your OIL price reference early on. I have not mentioned anything about Gold, you did. Doesn't matter where I got my degree from. I have three degrees by the way. During my economics degree I studied under two economist who came from the World Bank. Others were respected researchers.
Oil was at $44 a barrel 2 years ago. It was at $143 three weeks ago and is now down to $117. Another bubble, trending similarly to gold. And, if you're trying to impress me with professors you had years ago, I'll just drop that my step-father is published (he helped to write a widely used econ textbook). Although sadly he has dementia now and is not thinking much about the economy at this point.
Oil was at $44 a barrel 2 years ago. It was at $143 three weeks ago and is now down to $117. Another bubble, trending similarly to gold. And, if you're trying to impress me with professors you had years ago, I'll just drop that my step-father is published (he helped to write a widely used econ textbook). Although sadly he has dementia now and is not thinking much about the economy at this point.
my fathers a director for fortune 500 company. Couldn't have a intelligent convo about his field though as I have nothing to do with his work
My point in mentioning my teachers is in relation to your question about where i studied.
Anyway, there was a run up in oil prices. In 2005 as indicated by the link I gave there was a call that the "oil bubble" (which there isn't one) had burst. Yet the following year it continued to rise. here we are again, with prices slowing, because of decrease in demand and a some what stegthening dollar. That has NOTHING to do with asset hyper inflation or what some people like to term bubbles. As I have shown with home prices and available credit I have shown with that link (http://www.forbes.com/business/feeds/afx/2005/08/30/afx2195813.html - broken link)I have provided that oil prices do not always trend upwards. At times it slows, levels off and then continues upward again. Even with the current drop in prices we are still almost 50% above where we were a year ago. That is far from any sort of crash or collapse in prices. As I said before, in economics you deal with year over year trends, not month over month or week over week.
At times it slows, levels off and then continues upward again. Even with the current drop in prices we are still almost 50% above where we were a year ago. That is far from any sort of crash or collapse in prices. As I said before, in economics you deal with year over year trends, not month over month or week over week.
I don't disagree with this. That actually sounds a lot like housing. Why do you believe that housing won't trend up again, but you do believe that commodities will? How can commodities be the next bubble, but housing is still looking at a larger crash? I think the next bubble is still an unknown which is why I asked the question in the first place. I'm liking global REITs though.
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By the way as a parent of a 28 year old, it won't hurt your son one bit to take loans or go to a lesser school for a couple years IMO. Mine went to Lynn ...I spent a fortune and it was a total waste of money and he could have learned alot more at a PA state school than that ridiculously expensive private school. What a waste of tuition. It was like the 13th grade AND you couldn't even depend on the counselors to put the damn kid in the right courses. He started freshman year with no core courses they were "full". When I finally resolved that it was 6 weeks into it, I had to go all the way to the head of the University, and he still had to take an extra year to catch up. What a racket. 
...And plenty of clean reposessed cars for sale. 
. You are so right about that last statement..
