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Well, whatever you want to think, in my book a $400k+ debt is a ton unless you're wealthy. If you want to believe otherwise, well, go for it.
How insane what sounds to people? You think NJ is the only place with inflated house prices?
$380,000 for a house isn't even remotely what wealthy individuals in NJ would spend.
and no, NJ isn't the only place, but i recognize it's not the majority of places in this country where a $400,000 mortgage is relatively normal for middle class or upper middle class.
$380,000 for a house isn't even remotely what wealthy individuals in NJ would spend.
Huh? I was talking about the debt, not the price of the home. Obviously nominal debt isn't the issue, but rather debt in relation to income/wealth. $400k+ is high for anybody in the middle-class, on the other hand if you're making $500k/year its not high.
Huh? I was talking about the debt, not the price of the home. Obviously nominal debt isn't the issue, but rather debt in relation to income/wealth. $400k+ is high for anybody in the middle-class, on the other hand if you're making $500k/year its not high.
once you buy a house and take a mortgage, you should have 80% of the purchase price in debt.
Debt is not a bad thing. Unplanned debt is a bad thing. People who use debt as a financial tool come out ahead of those who do not. Adequate planning is obviously essential, but when I hear people say they are completely debt free, I often wonder why they don't put more effort into personal financial planning.
i agree. there's good debt, bad debt, cheap debt, expensive debt. i have very little reason to pay off my student loans @ 1.625% because that is extremely cheap debt. my mortgage is 3.875%, so i go back and forth on how much extra i should pay. my initial mortgage was 4.875%, and i had planned on making extra payments quite frequently, but at 3.875%, i'm less inclined to, because i can use that money in investment accounts.
In personal finance debt is usually a bad thing, as personal debt is almost always taken out to finance consumption, not increases in revenue generation. There are only a few cases, within reason, where it can make sense. Student loans being the primary case.
What evidence is there that people that use debt in their personal fiances come out on top of people that don't? How would my personal fiances be improved by taking out debt?
i'm not sure there's evidence to make this general statement. but i do believe that if one uses debt wisely, whether it be a person or a business, they can improve the financial situation. using it wisely does not include using it to buy more than you could otherwise afford. i personally would not want any debt to cost me more than 3 or 4%. student loans being the only possible exception. and, depending on what's going on at the time, mortgage could be higher cost than that, but i'd personally want to pay if off much quicker.
Huh? I was talking about the debt, not the price of the home. Obviously nominal debt isn't the issue, but rather debt in relation to income/wealth. $400k+ is high for anybody in the middle-class, on the other hand if you're making $500k/year its not high.
so you think someone making less than $500k/yr can not afford a mortgage of around $400,000? a $3,000 P&I and Taxes monthly payment is 30% of a $10,000 monthly household income, which would be $120,000/yr. so your position is that someone's monthly payment should be around 7-8% of their monthly income?
but i do believe that if one uses debt wisely, whether it be a person or a business, they can improve the financial situation.
With the possible exception of student loans, how exactly does using debt improve your personal financial situation? In particular, how does buying consumer goods via credit improve my financial situation.
Also, you are focusing on nominal interest rates, that doesn't make much sense. A rate of 3~4% today for short term debt (<5) years is equivalent to 7~8% in a more normal economy, that is because the < 5 year treasuries are all yielding 0%~1.9%. Anyhow, you need to look at the real interest rate.
its a general guideline of people who want to make appropriate financial decisions.
Its a guideline that you should have 80% mortgage debt after you buy a home? I don't know...maybe you got confused somewhere. I'm familiar with the suggestion that someone should have a down-payment of at least 20%, that of course relates to banks underlying conditions, but I've never heard a guideline about having at least 80% mortgage debt. Maybe its in the debt-junkies handbook or something......I don't know.
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