In article <1137071828.067601.48610[at]z14g2000cwz.googlegroups.com> ,
"$cott" <ezmortgageloanz[at]aol.com> wrote:

- quote -

Perhaps, but again, you fail to take into account risk. What if
one of the kids or his spouse gets cancer. By using up the 2nd
mortgage on cars that will rust out long before the payments are
done, they have given up the ability to borrow money for life
saving medical treatment. You have to consider risk. If you
mortgage yourself up to the limit buying consumer goods, all it
takes is some small event to tip over the house of cards.

- quote -

That type of thinking is used by all those people who bought far
too much house, and now don't even have an extra $6 to go see a
movie once a month. How else could over 10% of mortgages be in
default?

- quote -

Maybe that makes sense to math wizards, but it makes little sense to
the 92% of the population that struggles to make a living on a pay
check.

Most people get paid some regular amount, lets call it $X per month.
They all have expenses, $Y per month. Often times Y is very close
to X. In fact, most work-a-day people only make a few thousand
dollars profit a year after taking care of expenses and taxes. Some
make less, some make no profit, and some go backwards each year.

Net worth might be a fun calculation for you, but for most people,
what matters is how much they keep of what they get. Those that
are good at keeping more of what they make have an opportunity to
accumulate wealth. Those who keep little of what they make might
make it to the retirement line, but end up there broke and living
on charity. Those who spend more than they earn will end up toes
up at some point. For those people, the calculations, special cases,
and cheap mortgages mean nothing...they are still broke.

-john-

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

"$cott" <ezmortgageloanz[at]aol.com> wrote in message
news:1137072620.364264.8060[at]g49g2000cwa.googlegroups.com...
- quote -

How do you compute the rate of return on stocks? Isn't their value a
function of market conditions?

Elizabeth Richardson

"$cott" <ezmortgageloanz[at]aol.com> wrote in message
news:1137071828.067601.48610[at]z14g2000cwz.googlegroups.com...
- quote -

Scott, you're just dead wrong on this. The cash value of your house is it's
resale value. Then minus the mortgage. The difference, called equity, is
part of your net worth. Don't try to talk Standard Accounting Procedures
with accountants.

Elizabeth Richardson

Disposable income freed as a result of being mortgage free is not
liquidity of home equity and appreciation is a function of market
conditions and not rate of return.

Regards,

H. Scott Miller
Commercial and Residential Lender/Broker

www.RealEstate-IQ.com
www.EZMortgageLoanz.com

John,

I enjoy your "debt free or die" mentality, but let's keep things in
context here. I advised the OP to consolidate the two cars (before I
was aware of the interest rates) and the student loan into a 2nd
mortgage. I hardly think reducing his cash outlays 581 to 120 per
month is paving the road to bankruptcy.

We appear to disagree on other points as well; if you want "shelter",
rent an apartment, but home is so much more then that and should be
managed like any other investment.

Net worth is defined as the CASH value of all of your assets, minus the
total of all of your liabilities. Put another way, it is what you OWN
minus what you OWE. Owning a house outright is an asset, and until
then, it is a liability. Real Estate Holdings (owned real estate) is
used towards networth calculations, home equity is not. This is not my
definition but SAP (standard accounting procedures).

Regards,

Scott Miller
Commercial and Residential Lender/Broker

www.RealEstate-IQ.com
www.EZMortgageLoanz.com

$cott wrote:
- quote -

You misread my post. My original post was about debt reduction, not
consolidation. I'm not necessarily trying to minimize interest paid.

- quote -

In my case, home equity is nice but it will never actually be realized
for this house in the way traditionally thought of, because the equity
in my house will, within the next 2 to 4 years, be put towards a bigger
house. Whether it is to be included in one's net worth...you're the
first person I've ever heard say it shouldn't.

- quote -

I agree, which is why there is no way I would ever pay off relatively
short-term debt with home equity that would carry a much much longer
term and also be tied to my home.

- quote -

That would benefit me from a cash-flow position. But certainly not a
short-term or long-term standpoint.

Rolling the 19K
- quote -

You're advising me to kick the can a ways forward. It wouldn't relieve
me of debt, and would in fact increase the debt as the interest actually
paid would be much more over the years it would take to pay off, versus
the 2 to 3 years maximum it will take me to pay off my debts currently.

Also, it's clear you have misread my posts. I'm not trying to "do more
with less" - I've simply come up with a nice chunk of cash (to me) and
need to decide which debt to pay off first. The last thing I'd want to
do is simply push off the debt by rolling it into my home equity LOC or
a 2nd mortgage.

- quote -

Whoah. Did you read my posts?

- quote -

This confirms it. You did not read my posts. I'm not a stay at home mom.
I'm the husband of one. I am employed.

- quote -

Scott, I appreciate your participation in this thread as the more advice
I receive the better. But please, next time, read my posts prior to
responding.

"$cott" <ezmortgageloanz[at]aol.com> wrote in message
news:1136472263.496071.224060[at]g14g2000cwa.googlegroups.com...

- quote -

I look upon lack of liquidity as a desirable feature. The time and trouble
it would take to sell makes me stop and think and prevents me from selling
to get quick money for a foolish purpose that I would regret after cooling a
off period.

In article <1136472072.128675.247320[at]g47g2000cwa.googlegroups.com> ,
"$cott" <ezmortgageloanz[at]aol.com> wrote:

- quote -

Like all recent B-school grads, you are very good at running the
maximization calculations. But that is only 1/2 of the story. The
other side of the equation is risk. This is actually a mini-max
problem, not a simple maximization calculation. You want to
maximize return while minimizing risk. Those who have a significant
asset base can modify this to maximize return while controlling risk.

If you don't factor in risk, you end up bankrupt. Like Dave Ramsey
says, foolish with zeros on the end. Someday your wisdom gained
through age and experience will catch up with your B-school
learning, and you will understand all of this.

Until then, please don't advise average people to play casino
with their one and only asset, which is home equity. A home
is something that keeps your family warm and dry, not something
you gamble away in Las Vegas.

-john-

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

"$cott" <ezmortgageloanz[at]aol.com> wrote
- quote -

Because this is a forum to help people, and people may base
their decision on the number of voices who say to do X
(instead of Y), I will point out that every reputable
finance publication I have read on this subject counts one's
mortgaged home as an asset, while the balance remaining on
the mortgage is factored in as a liability.

- quote -


I don't know if you're playing with words to convey a
particular philosophy or not, but real estate appreciation
is extensively discussed and used to decide whether to rent
or buy. Home equity, AFAIC, most certainly be said to have
at least an /estimated/ rate of return.

As for the liquidity of stock (without taking a loss) vs.
the liquidity of a house (without taking a loss): The
distinction is important but not all that big. There is
generally a market for houses, as long as they're at the
right price. Same for stocks. The question is how much loss
one can tolerate on each.

- quote -


Parsing the above statement is very difficult.

Speaking strictly of the dollar figures, the fact is that
taking out a personal home mortgage just to get the tax
deduction is /not/ always financially advantageous.

"$cott" <ezmortgageloanz[at]aol.com> wrote in message
news:1136472072.128675.247320[at]g47g2000cwa.googlegroups.com...
- quote -

I disagree 100%. I own my home outright. I do not pay mortgage. Therefore,
my disposable income is higher than it would be if I had a mortgage.
Therefore, my equity IS liquidity. To further disagree, home equity does
have a rate of return - you call it appreciation. That's what happens in the
stock market, usually called growth, or a CD, usually called interest. Rate
of return is the measurement of the increase in value over a period of time.

Elizabeth Richardson

There difference is liquidity. A stock certificate can be liquidated
regardless of circumstances, home equity can not.

Regards,

Scott Miller
Commercial and Residential Lender/Broker

www.RealEstate-IQ.com
www.EZMortgageLoanz.com

Elizabeth,

Regardless of whether I make a living assisting people in purchasing or
refinancing their home, the facts remain......A home is an asset when
you own it outright and a liability when you have a mortgage (the banks
owns the house).

Home equity has no value until it is captured and converted to
something tangible (cash). Equity grows as a function of real estate
appreciation and mortgage reduction, but equity has no rate of return.


You need to read my posts again, because I have not advocated
mortgaging the poster's home 100%, his financial planner did. (I can
only imagine that his financial planner is a believer of seperating
equity in placing it a tax advantaged side investment).

I am sorry that you (and others) are so strongly opposed to maximizing
the only real tax deduction allowed to non-business owners. Uncle Sam
subsidizes the home investment (mortgage tax deduction), and I am of
thought that we should maximize these incentives whenever possible.
This has no bearing on my profession, it just makes good fiscal sense.


I hope that you are never beset with an emergency, job loss or
disability because then you will learn firsthand the value of your
equity (when you can't access it, is it still considered net worth?).

Liquidity is not a component of home equity, so how can it be
considered part of your net worth?

Yes, I do profit from advising my clients to view their home as an
investment and to successfully manage equity to increase liquidity,
safety, rate of return and tax deductability. I do understand that the
perception of the lending industry parallels that of used car salesmen,
but if my advice leaves my client in a better position (both short term
and long term), then I can consider what I do of value. Not all of us
are motivated by "fleece and flight" mentality, and I would appreciate
the benefit of the doubt from those that have not dealt with my
personally (There are over 500K loan originators in this country, and I
can only speak for myself and not the masses). You know nothing of my
business model or approach to doing business, so it is rather lofty of
you to subject an opinion that I am "out for the money" (Look at my
guarantee section on my website, and you will note that I am more
customer oriented then any other lender in the industry; does your
business or employer offer the same satisfaction/price protection
metrics?). I don't know you, so I would not be as bold to project an
opinion based upon ignorance, kindly extend me the same courtesy.

To the poster of this thread, before considering paying off the school
loans you might want to consider refinancing (not with me) the student
loan in hopes to lowering the interest rate. Check out one of the
following links for further details:

Sallie Mae Student Loan Consolidation:
http://www.salliemae.com/apply/borrowing/smartloan.html
Financial Aid Loan Consolidation:
http://www.financialaid.com/halo/index.cfm

Regards,

Scott Miller
Commercial and Residential Lender/Broker

www.RealEstate-IQ.com
www.EZMortgageLoanz.com

In article <1136391867.339335.301680[at]g47g2000cwa.googlegroups.com> ,
"Andy" <ineverevercheckthismailbox[at]yahoo.com> wrote:

- quote -

Congratulations Andy! You are a kick-butt accumulator of wealth.

The high risk investor that posted should ask himself who he
would rather be: Andy with a paid for house, or the media's
ideal investor who has no equity and is saddled with an interest
only loan in a sagging housing market with skyrocketing interest
rates.

-john-

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

"$cott" <ezmortgageloanz[at]aol.com> wrote in message
news:1136376302.713741.220770[at]z14g2000cwz.googlegroups.com...

- quote -

Isn't that the same as saying a stock certificate is a sleeping asset with
no tangible value until you sell it? Every net worth calculation I have ever
seen puts the market value of a house in the "assets" column right along
with stocks, bank accounts, etc. Of course, there is that damnable mortgage
over in the "liabilities" column that you have to deduct.

"$cott" <ezmortgageloanz[at]aol.com> wrote in message
news:1136376302.713741.220770[at]z14g2000cwz.googlegroups.com...
- quote -

This is pure, unadulterated, bull. Your balance sheet will never "balance"
if you don't consider your house as an asset. All assets (like your house,
cars, mutual funds) which exceed your liabilities (loan balances) are your
net worth. Of course your home equity contributes to your net worth.

Folks, don't let someone who makes his living at selling mortgages convince
you that you should have your home mortgaged 100%. That is not good
financial advice, but someone trying to line his pockets.

Elizabeth Richardson

John A. Weeks III wrote:
- quote -

Home equity is the functional equivalent of a bond that pays monthly
interest equal to the rental value of your home. And, that monthly
interest is tax free!

My home is probably worth $330,000 and it is paid off. Houses in my
neighborhood have been renting for about $1,100 or so. Doing the math,
my home equity asset is giving me a rate of return of about 4%, tax
free. Thats not too bad for a guaranteed rate of return.

Andy

In article <1136376302.713741.220770[at]z14g2000cwz.googlegroups.com> ,
"$cott" <ezmortgageloanz[at]aol.com> wrote:

- quote -

That advice will lead one to 1,000 bankruptcies. A house is
shelter. Everyone needs shelter. If you don't have a paid
for house, then you need to rent shelter, often times paying
high rates of interest in the process, or even worse, by helping
to make a landlord rich. Home equity is a safety net that keeps
your family safe and warm, and saves your but in the event of an
unexpected disaster.

-john-

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

As this thread was originated by the poster under the guise of debt
consolidation, my suggestions were geared towards this goal in mind.

After reading the entire thread and additional posts from the author, I
would like to make some additional comments:

- Home equity is a sleeping asset. In other words, it has no tangible
value until one of two things happens; either you sell out to capture
the equity or you refinance to claim the equity. Home equity can not
be considered part of one's networth until one of these two events
happen.
- "Moving debt" is a short term fix to the author's dilemna, the long
term fix is to either lower cash outlays to be in line with the current
family's income (budget) or increase the family's monthly income (Earn
your way out of debt).
- Aside from the added tax benefits from converting non-deductible
consumer debt into tax deductible mortgage interest, the author would
benefit from drastically reduced monthly expenditures. Rolling the 19K
currently owed into a 30 year 2nd mortgage at 6.25% would result in a
payment reduction of nearly 400% or reduction from 561 per month to
116.99. Combined with an equity acceleration plan, the author can
benefit from the added tax benefits and minimize the total interest
paid back. It appears to me that the author is trying to do "more with
less" (or at the same with less), and this is a viable option based
upon this goal.
- If the author can't pay his bills, then he is going to lose both his
house and the uncaptured equity.
- I wouldn't pay off anything with either the bonus or inheritance as
the author is currently unemployed with child (and stay at home mom).
This money might come in handy for one of those unexpected emergencies.


Regards,

Scott Miller
Commercial and Residential Lender/Broker

www.RealEstate-IQ.com
www.EZMortgageLoanz.com

option 1: pay off student loans first and cars debt second.

the question I would ask: how long until totally debt free (I think you
uggested 2.5 years). In that 2.5 years (30 months) what will be paid
off first (car1, car2 or student loan?)

option 2 pay off cars first and student loan second. How long to be
totally debt free with this technique? car1 zand car 2 are paid off
immediately, leaving only 1 bill left (student loans). $9000 bill,
with another $480/month being applied to it, my simple math has this
paid off in less than 20 months. Gets you access to your money 10
months sooner. In addition there is a tax deduction which may help
this cause.

option 3 might be less obvious, but when I looked at all my student
loan debt (I had 10 loans when I graduated), I added an additional $25
to each payment. Didn't do much "immediately", but even after 1 year,
a couple of my loans dropped their minimum payment enough I could see
progress. A possible third solution could be to make more than the
minimums on the student loan while paying off the car first.

"teleGuy" <ms236204[at]yahoo.com> wrote in message
news:xBhsf.179$3Y3.146[at]trnddc02...


- quote -

Correction -- you *want* to do it, but you don't *have* to.

An important distinction that will help you get out of debt
faster, and remain out of debt for the rest of your life. Determining
"want" from "need" goes a long way towards saving money.


- quote -

That would be $6000 to $6500 that could go towards
paying current debt obligations, rather than going further
in debt.

Think about it.