"SD" <siddharthgdalal[at]COLDmail.com> wrote
- quote -

I only owned it six years, which I do not consider the long run.

I bought it just as the bubble was becoming large in my area in 1996. Over
six years, it appreciated by a factor of 1.57, for an annualized return of
7.8%. My mortgage was so small that I couldn't deduct the interest. Annual
maintenance and property taxes were steep but, like your experience, cheaper
than renting the same size space. Plus, it was much quieter.

However, since I sold it in 2002, home values have stagnated or declined a
couple percent in this same area. This was a condo/coop, so it's easy to
compare prices.

- quote -

I feel it has everything to do with how people make rational choices. My
impression is that couples have children with very little advance financial
planning and largely to keep up with the joneses or just because everyone is
doing it.

SUVs are popular largely because of the "keep up with the Joneses"
mentality.

Remember, this country faces record levels of personal bankruptcy.

- quote -

I included property taxes and insurance in my mortgage payment because
thats how I pay it - in the same monthly payment. Maintenance costs can
be high and I do have savings to account for that. I also hope that the
little extra money from my mortgage interest deduction will contribute.

- quote -

Was that first home a good or bad investment in the long run?

- quote -

That is an advantage of living single and nothing to do with most
peoples lives.

"SD" <siddharthgdalal[at]COLDmail.com> wrote
- quote -

Quite ordinary markets support an argument for renting instead of buying.
See the 1998 Wall Street Journal article "Every House Is a
Money Pit," by June Fletcher. Excerpt:
---
A study commissioned by The Wall Street Journal suggests that [residential
house] repair problems have less to do with luck -- or even the quality of
construction -- than one might think. Its sobering conclusion: almost every
house, no matter how recently or expertly built, is a money pit.
---

I think the full article is still accessible at
http://www.southcoasttoday.com/daily...8/t04ho127.htm
Or google for more excerpts from this article, using {"Every House Is A
Money Pit" Fletcher}

- quote -

You are omitting the cost of maintaining your house; property taxes; home
insurance; etc.

- quote -

For my first home purchase, I was willing to pay more money each month for
the extra peace and quiet that one's own home usually gives. That is, I
traded money for quality-of-life. It was not strictly an economically ration
al decision. I paid cash for my second home.

On the other hand, I have a relative in his mid-50s who is loaded (with
money). I believe he's loaded because he lives in a very inexpensive
apartment, lives frugally as well, and invests his money, rarely if ever
selling stocks he buys. The landlord loves him as a tenant, because he's not
any trouble and has paid his rent reguarly for over a decade. He won't buy a
house, because the apartment where he lives is quiet and satisfies his space
needs.

Elle wrote:
- quote -

Maybe if you are in crazy markets. My mortgage is 1.5X my rent of an
apartment half the size. There was no calculation by which renting was
better for me.

- quote -

Rent = payment that increases over time. Mortgage = fixed payment over
time (not counting the crazy mortage schemes of today). In this case
rent increases should cause more stress than a mortgage. All of this is
problem with lack of planning, not anything else.

- quote -

Yes it can be. But are you saying that you would have preferred not to
take your own mortagage and rent until you could pay cash if you could
change things about your past?

- quote -

Actually, most people don't need a monster house, atleast not to start
with. A house that one can afford is IMHO one of the best investments
one can make.

newrvguy wrote:
- quote -

I've enjoyed the books by Ric Edelman and Andrew Tobias. Clark Howard
has good info on his web site (ClarkHoward.com).

"SD" <siddharthgdalal[at]COLDmail.com> wrote
- quote -

I realize this is just a casual forum, and you probably meant that home
loans generally are inevitable.

But in fact home loans can be avoided. It may very well pay well to live in
apartments for years until one has enough saved to pay cash. Furthermore,
there is strong evidence attesting to renting being a superior investment
compared to buying.

The "American (wet) dream" (pardon my locker room reference) today demands
that everyone have kids and a house and be in heavy debt. The fact is
personal bankruptcy is at record levels. People are not planning carefully
around their bearing of children. One result is overstressed parents clawing
for a financial foothold, increasing the likelihood of poor child rearing
and even divorce.

In other words, debt can be ruinous on many, many levels.

The word needs to be broadcast: One does not have to take on debt to get
ahead in this world. Quite the contrary.

- quote -

Correct. This is a far more rational decision than the ones many people are
currently making.

People need to budget every dollar and understand how they _must_ live if
they insist on a monster house. If they do this, then said monster house is
in fact easily affordable. With luck they will do this and most will find
that the monster house is a terrible investment, given their circumstances.

"SD" <siddharthgdalal[at]COLDmail.com> wrote
Someone wrote
- quote -

You must like debt.

I advocate paying cash for one's car. Buying used is fine, especially if it
ensures peace of mind (which is priceless!).

Always buy a house that is easily affordable, too. Build wealth gradually.
Don't borrow from Peter to pay Paul, or else one will never accumulate
wealth.

Elle wrote:
- quote -

I don't like debt but I'm not averse to it. I don't advocate being in
debt or any such thing. However some forms of debt are essential (such
as home loans). Credit cards only cause debt if you are irresponsible. I
am advocating responsibility here, not love of debt.

Even if I could pay for my car in cash I wouldn't. Who else is going to
loan you money at rates lower than car companies Plus used car loans
suck.

- quote -

Thats debatable. New car = more peace of mind (atleast for some), this
topic has been beaten to death in a previous thread a few months ago.
And with the kind of prices, loans and deals you get for new cars, a
reasonably good used car is generally more expensive.

- quote -

A house that is easily affordable. A lot of people will have to move for
that .

- quote -

Not if you ever want to buy a new car or a house.

In article <de20e5$p5q$1[at]murdoch.acc.Virginia.EDU> ,
SD <siddharthgdalal[at]COLDmail.com> wrote:

- quote -

That is really easy to say, but for people with addictive
personalities, a credit card is just like a bag of cookies
or 12-pack of beer--you cannot stop until you had it all.
Giving a person a credit card when that person cannot easily
control their spending is just like giving them a hand
gernade--you never quite know when it is going to go off.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

SD <siddharthgdalal[at]COLDmail.com> wrote:

- quote -

All those benefits are great, I guess. But if you carry a balance, they are
very expensive. You need self control to pay off the card every month, not "not
to max out". You can use credit cards as a handy form of cash. I do.
However, the first month you can't pay it ALL off, you should put it a sealed
envelop, or freeze it in a block of ice, or whatever it takes to keep you away
from it.

By the way, the goal on credit scores is not to get the maximum score. The goal
is to not care what your score is, because you don't need much credit.

-- Doug

- quote -

If you are going to misuse money, you don't need plastic. As Mieko
mentions it is really hard to keep track of cash expenses.

- quote -

It is like Obesity. Completely avoiding the fatty foods one likes is
really hard and generally doesn't work. Moderation is what needs to be
learned.

- quote -

Make irrational choices is what people do. Some learn from things around
them. Some don't. Either way people have to learn. Somebody suggested
making a simple spreadsheet and keeping track of your net worth in some
thread here. I update my spreadsheet once a month and have been doing so
since over a year. Looking at the savings accumulate long term has been
rewarding. Avoiding plastic is not the solution. But just somehow
getting something more important (like looking at diminishing debt,
increasing savings by keeping track of things) is a better way.

- quote -

income after tax and your savings goal, then you need to cut expenses.
Selling your car may or may not be the way. For two months keep track of
every $ you spend and look at it retrospectively and see what you could
have done without. You will probably easily knock off a few 100$/month
of expenses. Seperate your spending by category and reduce your expenses
in the biggest categories (e.g. eating out/ movies)

In article <john-436E23.20390417082005[at]ip-lcc.supernews.net> , "John A. Weeks III" <john[at]johnweeks.com> wrote:
- quote -

I learned my lesson 10 years ago, and one month the credit card bill came, and
I didn't have enough money to pay it off in full. Don't spend money you don't
have.

Personally, I love my credit cards, my main ones give me cash back, I can pay
for things I need without having to go to the ATM to get cash, I can pay the
exact amount and not have change in my pocket that I'm going to waste on other
things, and I get a great listing of everything I've bought that month, which
makes it super easy for me to put it in my budget.

But I only use it on things that I need and can afford, and I pay it off in
full every month. Doesn't matter how you spend your money, with cash, with a
check or with a card - you're still spending money. Personally, I feel cash is
much harder to track.

Mieko

"SD" <siddharthgdalal[at]COLDmail.com> wrote
- quote -

Destroying them and having no plastic available for awhile is one way to
learn to stop misusing them.

Having serious debt by itself is extremely stressful. I can't think of
anything more overwhelming. It's a loss of freedom. Eradicating it requires
a _serious_ change in lifestyle. This is extremely difficult. One has to
imagine one's self in another person's shoes here, a person who has
overlived his/her means for many years.

I posted about an acquaintance's $25k of debt (which is snowballing) several
weeks ago. All the evidence is he's frozen and in the mindset that, if he
ignores it long enough, it will go away. He is increasing his participation
in (athletic) recreational activities, which not only cost money but mean he
isn't going to get the second part-time job that several of you suggested
was a viable solutionto his problems. If it were easy to change his
lifestyle, then why would he make the irrational choice he's making? It's
very hard. I predict he will suffer some major setbacks in life in the next
ten years and learn the hard way.

Regardless, I don't know the specifics of the original poster's situation. I
do get the feeling he's seeking a magic bullet to dispel his debt, so I hope
he'll elaborate, which ultimately will help others.

- quote -

Everything in life is double edged, all you need is to know how to use
it right. There is no point in giving up things because "if you have
them you will misuse them". Just learn to stop misusing them.

SD <siddharthgdalal[at]coldmail.com> wrote:
- quote -

Well, I actually use a miles card and charge a lot to it (including
most of my bills and my mortgage) and pay it off at the end of the
month. We get 2 free plane tickets a year this way.

But, when I met my wife, we fixed her situation up by getting rid of
her credit cards all together. She just loses track of the money
and gets careless.

Different systems work for different people.

I got the impression the OP has a spending problem of living beyond
his means. If you have a hard time controlling your impulses, you
need to make drastic changes to get out of debt.

-Mike

Mike Stone -

Well done! I couldn't resist noting that my big luxury is my cable and
internet bundle. That makes three of us here in this topic! I wonder
what the heck ... maybe we're all overpaying for our TV's and internet?
(Actually, I took a long weekend recently, for the first time in years.
It cost $440, but it felt good!! Really good! And it fit within my
budget.) I really liked the advice you laid out for newrvguy - but I
prefer a spreadsheet hands down over canned software. Keep saving, and
invest wisely and profitably.

newrvguy -

An accounting text book. Assuming an RV is in the $100,000 range (I
don't know) it sounds like you don't have a low-income problem, and are
fairly smart (even if not very good at budgets and financial planning).
The point being that you probably know how to use a spreadsheet like
Lotus 123 or other, and should take a few hours to do an income
statement that highlights your interest payments (in detail, for
example, so that you can see them very clearly). Rich Carreiro posted
some very competent basic accounting under another topic, recently. (If
you can't do this, get some help in that area, fast.) If I'm guessing
right, you have a surplus of income over expenses. So run the
spreadsheet out, monthly, over a couple of years, and see if you can't
find a way to apply your income surplus to reducing your interest
payments. Reading books is fine, especially good ones, but in the end
you have to get your accounting and budgeting in order. All advice is
subject to specific circumstances, and you should know your specifics
very thoroughly, and be able to project them out several years, in
order to selectively apply advice you read. Who knows - it may be that
you can rein things in to your satisfaction, eliminate your interest
payments over the course of a couple of years, and keep the bus Oh,
P.S. - I pay mortgage interest, nothing else. I once had a one-pay
lease on a Jeep, but the details worked out to my advantage
dollar-wise. Kind of like SD pointed out here, a credit card is a
convenience - not a source of funds.

Hope this helps a bit.

In article <de01tm$rp5$1[at]murdoch.acc.Virginia.EDU> ,
SD <siddharthgdalal[at]COLDmail.com> wrote:

- quote -

Giving credit where credit is due, Dave Ramsey put it best.
Credit cards are like vipers. If you play with them long
enough, one of them is going to bite you. It isn't worth
taking that risk. Get rid of the cards.

Dave wants you get rid of them all. If you are responsible
person, I think you can have one. There is no need for more
than one. If you cannot control your spending, then follow
Dave Ramsey's plan and cut them all up.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

"newrvguy" <stevefrench[at]shaw.ca> wrote
- quote -

I know you just asked for books, but I think you should ask for specific
advice on this situation as well as any other debt you have.

I suspect any half-decent book on personal finance is going to say pretty
much the same thing about your expensive car.

Care to elaborate a little more on what you mean by "giving it back"? Do you
mean simply selling it (do-it-yourself sale) or trading it in on another
car?

Is there a pre-payment penalty on the loan you have on the car?

Want to share the numbers on the loan, the age, condition, and model of the
car?

Expensive cars are not only expensive to buy, but the maintenance and
operating costs also tend to be _very_ high. With no relief from the
increases in gas prices in sight, getting rid of this car really is
something you should strongly consider.

I would investigate seeing if you can trade it in for a high-reliability,
preferably used, gas-economical car (Honda or Toyota, say). This will cut
your maintenance and operating costs a lot. You can use the savings to help
pay off the loan on the original car.

www.edmunds.com is an excellent tool for pricing used cars (for trade-in or
private party sale, etc.), by the way.

Or do you just love this expensive car to pieces and would not scale down to
a Honda Civic or Toyota Corolla no way no how?

In which case, I think the only solution is to let time pass, whence you may
tire of carrying debt and see that Millionaire Next Door and Suze Orman
advice certainly is applicable and ultimately gives you more freedom
(releasing you from the shackles of debt!).

Good luck.