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Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Originally Posted by Huckleberry3911948
a very wise post. deflation, a complete blind side for the 21st century consumer, comin your way.
liquidity is everything. listen to radio host dave ramsey like your life depends on it.
I just finished the book "The Coming Generational Storm" (written in 2004). Having a home paid off is touted as a good strategy for the coming era. They are keen on the 'intrinsic' value of having an abode that is affordable and paid off, since you have to live somewhere...and the authors did not seem keen on our popular local spot of living under a bridge. I will be focusing on buying some positive cash flow income places during the 're-adjustment'. I feel the interest rates are gonna be very attractive, but only for a short season. Don't bank on the long term. Someone is gonna have to cough up some major bucks, and I want to be positioning as much 'tax free' as possible. I usually 'refinance' my commercial props to offset excess earnings with interest, and use the capital for improvements or additional REAL ESTATE investments. I don't buy stock market equities with leveraged real estate, tho I might with my student loan, If I can get the rate my kids did (2.7% for 20 yrs).
This is an interesting question to me. I own a property in Michigan that I have already lost a lot of equity in. I continue to pay it down by doubling and tripling the payments but it seems to lose value faster than I can pay it down. I have thought about slowing down on it for a while. It just feels like a sinkhole.
This is an interesting question to me. I own a property in Michigan that I have already lost a lot of equity in. I continue to pay it down by doubling and tripling the payments but it seems to lose value faster than I can pay it down. I have thought about slowing down on it for a while. It just feels like a sinkhole.
Why do even multiples of the original mortgage payment?
We did $100 /month, or $200 /month 'principle only' payments. Depending on our budget that is.
We are retired with a secure pension income. I did the math (professionally I was financial analyst/accountant) and decided that our best policy was to minimize expenses and reduce market risk. Paying off the mortgage in lieu of stock investments was a major decision which consumed a large part of our free cash but left us with minimal monthly expenses. Going forward, expense control is (IMO) our best option. We are in uncharted waters regarding the near/mid term financial situation and I'd rather have minimal financial risk for our future.
This is an interesting question to me. I own a property in Michigan that I have already lost a lot of equity in. I continue to pay it down by doubling and tripling the payments but it seems to lose value faster than I can pay it down. I have thought about slowing down on it for a while. It just feels like a sinkhole.
I mean if own the thing free and clear, you own it. Will its value ever drop to nothing?
To fully analyze the situation your total after tax returns on the alternative would have to be factored, but as pretty much EVERYTHING is negative YTD ...
It is not just 'declining equity' -- what did you borrow to buy the place -- don't forget that your "total potential cost" is what the lifetime of loan's interest would have been too -- having to "grow back" the 3x plus total cost of 30 year loan is even harder...
Not suggesting that you make yourself "cash poor" to continue paying off your house (in fact having more liquidity is probably a good idea right now...) but you don't really lose until you sell, and if you wait 30 years to pay off your loans that is a lot more of your money that goes to interest.
Contrary to the general media image, Michigan is NOT one big ghetto hitched to dying manufacturing behemoths. There are resorts, farms, Universities, drug companies, diverse industries of all kinds...\
That said ANY property could become completely 'unsaleable' at any price, but that is not likely!
We are retired with a secure pension income. I did the math (professionally I was financial analyst /accountant) and decided that our best policy was to minimize expenses and reduce market risk. Paying off the mortgage in lieu of stock investments was a major decision which consumed a large part of our free cash but left us with minimal monthly expenses. Going forward, expense control is (IMO) our best option. We are in uncharted waters regarding the near/mid term financial situation and I'd rather have minimal financial risk for our future.
I mean if own the thing free and clear, you own it. Will its value ever drop to nothing?
Good point.
Quote:
... It is not just 'declining equity' -- what did you borrow to buy the place -- don't forget that your "total potential cost" is what the lifetime of loan's interest would have been too -- having to "grow back" the 3x plus total cost of 30 year loan is even harder...
Yeah, that part of looking at the "end horizon" is why I do advocate EVENTUALLY paying off your mortgage early. Every person has a different situation, but early on, for me, building equity in my home has not paid off as well as directing more of that cash toward growing my traditional portfolio. I do occaisionaly throw a bit of cash at the mortgage (some times more than a bit) but EVENTUALLY I do want my 30 year mortgage killed off early, but I want to keep pumping up my traditonal investments too - it is just not smart to look at these as "either / or" options. You do BOTH until the mortgage is gone and the investment are growing on their own, then you stop working and plan how you are spend until your last dollar falls out of hand with your last breath
(nah, I'll leave the kids at least enough to buy a big pile of firewood for my pyre in the backyard and pay the fine for an "unauthorized outdoor fire" to the fire district...)
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What do you mean "lost equity"?
