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You've never owned a house if you think a lot of houses cost less then renting.
In the first years of a mortgage, many homeowners enjoy deductibility hence tax savings. As the mortgage ages, the tax savings disappear but the fixed mortgage payment lags way behind ever-rising rent.
The responsible homeowner dedicates these monthly cost savings toward building a reserve for the inevitable costs of repairs and replacements, so that eventual replacements (like roof and furnace) are already prepared for. Roofs and furnaces do not fail overnight; there is time to prepare for them.
Is there really no morality at all anymore in the real estate dealing? By saying the bank is taking most of the risk, you are (implicitly) saying that if the home dropped dramatically in value you would just send the keys back to the bank and default on your obligation.
Has the situation become such that ethically conscious investors cannot profit?
If so, then in a sense you are not profiting - rather, you are stealing the bank's money. Not legally, but morally.
I think a lot of morality has jumped out the window. Everyone schemes, buyers and sellers make tactics to beat each other up so nobody takes advantage of them. People drop deals on idiotic reasons on a whim, pissing and moaning over a 1,000 dollar bump on a 300,000 dollar deal. All because they don't want to let the other party "get one over on them"
Plenty of homeowners played the HELOC ponzi in the 2000-2007 housing market. I don't see why investors wouldn't take their money and reinvest it. its not my type of investing but it doesn't mean it isn't done.
Median mortgage payment is at most times lower than median rent payment. For that lower payment, homeowners also enjoy fixed P&I (try getting rent payments fixed for 30 years) and principal reduction, plus home appreciation.
The cost savings of never having to pay (ever-rising) rent, plus principal reduction, plus value appreciation, pretty much capture the net worth differential of homeowners.
Quote:
Originally Posted by freemkt
In the first years of a mortgage, many homeowners enjoy deductibility hence tax savings. As the mortgage ages, the tax savings disappear but the fixed mortgage payment lags way behind ever-rising rent.
The responsible homeowner dedicates these monthly cost savings toward building a reserve for the inevitable costs of repairs and replacements, so that eventual replacements (like roof and furnace are already prepared for). Roofs and furnaces do not fail overnight; there is time to prepare for them.
Yes and a homeowner has to do ALL the repairs, re roofing, appliances or anything else that breaks in the house. There is a lot more to a house than just making the monthly payment. You're giving the average homeowner too much credit. Lots tap into the equity for big item repairs.
The math doesn't add up on "using" debt to finance one's living. A car is not an investment (unless it's some classic or rare vehicle), so how would it ever make sense to "finance" a car, for example?
No vehicle is a investment. Maybe a speculation type market. Some collectors like to think investment because it pumps smoke up their ass about how much it's worth and they can sell a piece of metal for to another car collector to tell all his friends how much he paid for it. It's penis measuring at its finest
Ok my mom bought a car with zero % financing on a 5 year loan. It was a leftover model with a 4k discount.
In that 5 years the 20,000 dollars she would of paid cash upfront (using Daves advice) for her car was instead invested in a money market at 8%. ( at that time) Consider the compounded interest over 5 years. She would of had to pay for the car regardless. But she would not of made as much over 5 years if she started resaving that 20k.
Like I said Daves advice is great to get out of debt or a starting point. But he is not the end all be all in investing. Mist people I meet that are DR followers simpky spout the same thing he is saying, not ine original thought or investments idea. Just the absolutely no debt mantra.
I checked out Dave Ramsey just now and read about the credit card section. According to the website, "Responsible use of a credit card does not exist. Credit card debt is a major problem in America. There is no positive side to credit card use. You will spend more if you use credit cards..."
Really? Responsible use of a credit card does not exist? DR baby steps might be good way to start and more of a common sense. However, I do not agree with his credit card theory.
If you can pay off your credit card's balance monthly, what is wrong with using credit cards? I got rewards points, cash back, some insurance/warranty, and even protection against fraud.
Anyway, I am not his fan either
I love my business credit card.......I pay it off monthly......it keeps track of my expenses..........I got $900 back last year.......this year it will be more.
No vehicle is a investment. Maybe a speculation type market. Some collectors like to think investment because it pumps smoke up their ass about how much it's worth and they can sell a piece of metal for to another car collector to tell all his friends how much he paid for it. It's penis measuring at its finest
Ok my mom bought a car with zero % financing on a 5 year loan. It was a leftover model with a 4k discount.
In that 5 years the 20,000 dollars she would of paid cash upfront (using Daves advice) for her car was instead invested in a money market at 8%. ( at that time) Consider the compounded interest over 5 years. She would of had to pay for the car regardless. But she would not of made as much over 5 years if she started resaving that 20k.
Like I said Daves advice is great to get out of debt or a starting point. But he is not the end all be all in investing. Mist people I meet that are DR followers simpky spout the same thing he is saying, not ine original thought or investments idea. Just the absolutely no debt mantra.
My vehicles are......they are tools........that is why they depreciate for tax proposes.
I love my business credit card.......I pay it off monthly......it keeps track of my expenses..........I got $900 back last year.......this year it will be more.
Sometimes I wonder about the people who call Dave. Most of the callers make good money, and yet most of them ask questions that take just common sense to answer. The only thing I can think of, it doesn't take much common sense to make reasonable living these days. It's amazing what " fully independent and comfortably set in a career" people calling Dave don't know, paupers rarely called Dave when I listened. I don't think his advice has much value for the people having some common sense in them. Every Dave' advice beyond common sense is questionable, wishful, unrealistic (especially for the average people down the food chain).
I checked out Dave Ramsey just now and read about the credit card section. According to the website, "Responsible use of a credit card does not exist. Credit card debt is a major problem in America. There is no positive side to credit card use. You will spend more if you use credit cards..."
Really? Responsible use of a credit card does not exist? DR baby steps might be good way to start and more of a common sense. However, I do not agree with his credit card theory.
If you can pay off your credit card's balance monthly, what is wrong with using credit cards? I got rewards points, cash back, some insurance/warranty, and even protection against fraud.
Anyway, I am not his fan either
I'm not a fan of his either, and it was hearing from my cousin, who follows his advice, about his views on credit cards that first turned me off. I agree, he's good for a specific type of person in debt, but that's it.
My credit card is just too valuable for all the perks and protection it offers, such as the ones you've stated above. Plus, I pay it off in full each month.
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Really? Responsible use of a credit card does not exist? DR baby steps might be good way to start and more of a common sense. However, I do not agree with his credit card theory.
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