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Old 08-31-2010, 04:12 PM
 
Location: Sputnik Planitia
7,826 posts, read 11,736,005 times
Reputation: 9045

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case a)

someone wants to take 1 year off work and spend $30k traveling the world, then return and re-enter the workforce with an ample savings cushion to tide him over for 6+ months of a job search - considered "waste of money", financial suicide, not acceptable, risky etc. etc.

case b)

someone wants to put $20k down to buy a house that is declining in value, in a shaky economy where a layoff would lead to losing not only the downpayment but also the house and possibly wipe out all savings trying to stall a eventual foreclosure, resulting in shot credit that could result in all their credit cards being canceled and prevent the person from not even being able to rent an apartment - almost on the streets....

case b) seems FAR FAR riskier and detrimental to me but why is it that in the common perception b) is acceptable while a) is definitely not acceptable? Infact we hear about case b) so many times now in the media it has become a regular thing...STILL people refuse to believe that case b) is anything but a good choice.

WHY?
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Old 08-31-2010, 04:23 PM
 
Location: Chicago
1,953 posts, read 4,947,166 times
Reputation: 919
First off your question is how society looks at each individual and is completly opinionated. 2ndly nobody buys a house knowing that the house will decline in value. The market may have been declining but people assume it will steady out and eventually grow again.
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Old 08-31-2010, 05:06 PM
 
48,505 posts, read 96,596,613 times
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Bascially they both have risk. Is the risk worth it depends on teh person. A wants to travel the world and is risking being out of the workplace for oneyear with no employment.Both are risking spending 20K on what they want.One on shelter the other on travel. Different people different perception really on what is worth what.If both have the same finances then i time the 20K spent on travel will not be there as well as emploeymnt. The other wants to risk it on a home at low rates and that can decease i value but evben then may endupo costing less than in the futre. Its a choice you have to make lookig at your goals.
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Old 08-31-2010, 06:28 PM
 
15,633 posts, read 26,154,357 times
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A lot people are terrified of risk. Any risk.

Includes housing. When we bought our house, people said we were crazy -- and that was in 1987.
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Old 08-31-2010, 06:41 PM
 
Location: In America's Heartland
929 posts, read 2,087,937 times
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We all face risk everyday. The trick is to limit that risk.
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Old 08-31-2010, 10:04 PM
 
Location: Phoenix
354 posts, read 1,278,205 times
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There is a big difference in scenario, in (a) you are going to positively blow $30K on an extended vacation and expect at the conclusion of which to return with enough savings to support up to a 6 month job search.

The second is more speculative. People could get into a house they can afford and the double dip in the recession may not materialize and they are set.

Case (c) is one you should consider. Lease/rent a place and save your money. It is taking some people a lot longer than 6 months to find a job. I heard one advisor suggest ideally you should have a enough cash to support yourself for 2 years! I wish...
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Old 09-01-2010, 04:10 AM
 
106,036 posts, read 107,996,739 times
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everything in life is a gamble. i also bought property in 1987 and 2 weeks later the stock market crashed sending real estate in nyc down 30%...

it took a decade to come back.. today its worth many times what i paid...

my investments in the equity markets are up 1200% since 1987 ...

if i didnt go against the better judgement of the masses at that time i wouldnt have done any of the above.

time usually makes everything turn out okay....its just a matter of waiting for the cycles and if you cant wait then you have no business dabbling in long term assets.. you could speculate and try making money short term but dont call it investing. realize your taking big risks that not only wont you get the asset class correct but you may not get the time frame correct either even if you got the 1st part right.
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Old 09-01-2010, 09:52 AM
 
Location: Victoria TX
42,579 posts, read 86,688,686 times
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Traveling around the world for a year shouldn't cost you any more than half that, probably a lot less. $10K per person should be plenty. Just don't plan to spend any time in London or Tokyo or Dubai or any Club Meds.

By contrast, Australians are expected to do that. Everybody. Take a year off medical school, or take a leave of absense from your job, to travel the world. Looks good on a resume.

A year can be a long time, and you'll be burned out, unless you stop in one cheap relaxing place for several months a few times along the way. Moving on almost every day can feel like a job.
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Old 09-02-2010, 03:20 PM
 
Location: Sputnik Planitia
7,826 posts, read 11,736,005 times
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Quote:
Originally Posted by jtur88 View Post
$10K per person should be plenty. Just don't plan to spend any time in London or Tokyo or Dubai or any Club Meds.
$10k per person "plenty"? Divide that by 365 days and you get $27/day.. how do you figure you will pay for accommodation, food, transport, insurance, miscellaneous expenses along the way, entertainment, fees to attractions etc.? Not sure how you came up with that figure but it's too low even for a budget trip to Southeast asia unless you just want to go to your destinations, eat noodles and stay in your hotel room all day...not exactly the intent of such a trip.

A more realistic budget would be $20k for the year in cheaper destinations (i.e. Middle East/Africa/S.E. Asia).
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Old 09-02-2010, 03:43 PM
 
48,505 posts, read 96,596,613 times
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That is what I was thinking. More like 100 per day when on a budget unless you plan traveling only third world countries.
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